Taking Student Loans Seriously
With the rising costs of higher education, more people are turning
to student loans to pay for their education. If you still need money to cover
educational expenses after you have exhausted other aid and employment opportunities,
student loans are a good option. Just remember, student loan money is for
financing your education, not your lifestyle. Student loans are real money
that must be repaid, with interest, so borrow only what you need.
first step to taking student loans seriously is to determine an appropriate
amount for you to borrow. You'll want to consider the career path you plan
to follow and your eventual income. There are calculators available that can help you determine the
percentage of student loans to your eventual income.
The next step
is to do your own research to determine the best type of loan for your situation.
There are many different education loans available through federal and private
sources. When deciding which loan options are best for you, keep in mind that
federal loans are usually less expensive, have more deferment and forbearance
options available to postpone payments and have loan forgiveness opportunities
not available through private loan programs. Private loans are best used as
a last resort to help finance any gap that is remaining after family resources,
scholarships, grants, institutional aid, student employment and federal loans
have been exhausted. You'll also want to think about which lender can provide
these loans at the best price. Not all student loans are the same. Having
the right lender may save you thousands of dollars over the life of the loan.
Each type of federal loan, plus links to their descriptions, can be found
in the Federal Loan Programs section of Financial Aid 101 on the Financial
Aid Planning tab above.
Taking your student loans seriously
and establishing a good repayment history will open financial doors for you.
Repaying your student loans can help you establish a good credit rating! You
will demonstrate that you are capable of handling a large amount of money,
so when you go to buy a house or a car, lenders will want to finance you at
favorable rates. You will also avoid legal action from your guarantor, high
collection fees, seizure of your income tax refunds, wage garnishment, or
exclusion from financial aid and other government assistance that could be
critical to you in the future.