Debt is never an ideal situation. Wherever possible, it is best to minimize your debt as far as you can. However, sometimes, a loan can be the only solution. One such situation is college student loans. Sometimes, only a student loan can ensure you can go to a good university. Some may argue that student loans are unnecessary. After all, there are online courses that require just an internet connection to help with online collaboration and learning remotely. All at a fraction of the cost.
But if a loan is the need of the hour, read this blog.
Things You Need to Know About Student Loans
Student loans help students pay for the college education they need. Most of the best universities in the U.S. are not cheap or accessible. This means very few people can hope to pay the tuition and boarding fees out of pocket. At least not without some form of financial assistance. But it is foolhardy to jump right into a student loan without knowing the seven following things:
- The types of federal student loans
- Financial aid packages include student loans
- Loan payments become due a while after graduation
- Private loans can help where student loans can’t
- Loan forgiveness
- Bankruptcy does not include student loans
- Borrow sensibly
Let’s examine each tip in more detail below.
The Types of Federal Student Loans
There are two broad types of federal student loans:
Subsidized student loan are normally only reserved for students on financial aid. In subsidized loans, the federal government takes care of the interest payments until you graduate.
Unsubsidized student loans are available for all students. Their financial standing does not matter. But in this type of student loans, the responsibility of paying interest lies with the student.
For either loan type, students and families of students must present a Free Application for Federal Student Aid.
Financial Aid Packages Include Student Loans
Most people mistakenly assume financial aid involves free stuff like scholarships or grants. But in reality, student loans can often be part of a financial aid package. Student loans do the same job as grants or scholarships, that is to help pay tuition, room, and board. The only difference is that you need to pay them back once you have graduated. It is dangerous to assume everything in your financial aid package is free. So be sure to carefully go through the items involved and get in touch with the financial aid officer.
Loan Payments Become Due a While After Graduation
Contrary to popular belief, your student loans do not immediately become due when you graduate. This sounds like a relief, doesn’t it? Most student loans come with a six-month grace period to allow you to find a job first. Once you have a steady source of income, you can begin paying back what you owe. A monthly salary makes it much easier to make a monthly loan payment.
Private Loans Can Help Where Student Loans Can’t
You may get a financial aid package or student loan that does not completely cover the cost of attending college. Don’t panic. Contact your school’s financial aid department for a list of preferred lenders. Many schools pool their lists and usually have a comprehensive set of lenders you can approach. A private loan can help supplement your financial aid and cover the full cost of attendance.
While you may need to satisfy some requirements, your lender can forgive your student loan under certain circumstances. One of the requirements is that you hold a public sector job in a non-profit or government organization. Careers in law enforcement, military service or even public school teaching can go a long way to relieve you from the financial burden.
Bankruptcy Does Not Include Student Loans
Bankruptcy usually dissolves all your liabilities. But student loans are an exception to this measure. Student loans stay with you until you completely pay them off. You may also be interested to know that you should never stop making student loan payments. The federal government has right over your wages if you start to default on your payments. Be sure to keep to your payment schedule and not try to get rid of your debt by declaring bankruptcy.
The most important thing you need to know about student loans is that you should always borrow sensibly. A good measure is to avoid borrowing more than the annual salary you would get at your starting job. You can do research on potential careers and their salaries to get an idea of how much you can comfortably handle. A marketing executive at Visit One Click makes a different salary, while a paralegal gets an entirely different salary. Estimate how much money you will make after you graduate, and borrow accordingly.