 It
is a well known fact that student loans are today's largest form of
student aid. Researches have found out that it made up to 54% of the
total aid awarded every year. Nevertheless, with the rise of student
loans, several cases of student loan defaults occur. Even today, the
student loan debt is one of the major problems of most student
borrowers.
It is rising every year and the college expenses
as well as the graduate school costs have definitely gone up faster
than inflation. This case often surface when you take a particular loan
then another student loan followed by another loan. It is often said
that as much as you take student loan offers, your loan debt gets
bigger and bigger.
As the case for student loan debt always happens
and it carries some burdens to the attainment of the student's dream of
higher education, it is then significant that you consider some steps
that will help you lower or manage your debts. Perhaps one of the most
necessary things to consider is to borrow loans responsibly.
Think Before Your Borrow
Many people find it easy to rush through the
student loan process. Nevertheless, you could save yourself some money
in the long run if you take a minute considering some of the money
saving tips mentioned below.
Falling Into the Loan Trap? Oops! Avoid it!
Most of the time, you may find it tempting to
borrow up to the maximum amount. Well, this is what many people call as
the "loan trap". It is the case where you borrow the maximum amount of
money from the student loan lending company or institution even if it
is more than you can afford to repay. It often occurs for the fact that
need-based loans are very easy to apply for and they don't generally
require payments while you are attending your degree. So, to avoid
certain consequences as you enter the repayment period, you should
avoid the loan trap.
How Much Loan Do You Actually Need
Think first how much loan you really need before
you consider borrowing a student loan for your college. Always note
that when taking out student loan, you don't have to borrow the whole
amount which is generally specified in your award letter. Just borrow
what is sufficient.
Reduce Your Loan As Much As Possible
There are several choices available for student
loan borrowers. But, before opting for one, it is essential that you
question yourself if you can hold down the expenses; if you can work
more, either in the academic year or during vacations; or if there are
scholarships available for you. It is often said that if you minimize
spending or bring in more money, the amount you have to borrow for your
education tends to go down.
Consider Student Loans with the Best Terms
Note that the lower the interest rate, the less
pricey the student loan is. This in fact means, the less you will have
to repay for your student loan debt.
For your own sake, here is what your batting order should be (from the least expensive):
Student Loans
- Federal Perkins Loans
- Federal Subsidized Stafford or Direct Loans
- Federal Unsubsidized Stafford or Direct Loans
- Alternative or Private Loans
As you may know, most of the students thinking
for student loans have access to a special loan source these days.
These sources, like the Air Force Aid Society, have student loans terms
that are comparable to the Perkins or Subsidized Stafford or Direct
Loans. Certainly, it may be worth your time to look into the
possibilities. There are some sources these days that offer
low-interest student loan programs, and perhaps one of the most
resourceful is the College Board's online Scholarship Search.
Parent Loans
- Federal PLUS Loans
- Private Loans or Alternative Loans
As mentioned, there are two available forms of
education loans for parents. These programs are what commonly offered
by some colleges anywhere in the world. But, for great chances of
availing the benefits of such programs, it is best to check with your
financial aid office to see if the school you wish to attend offers its
own loan program. This will also allow you to know if you qualify for
the loan, before you submit a PLUS loan application.
How Much Should You Borrow?
Many experts agree that you should borrow only as
much as required. As mentioned earlier, it is often tempting to borrow
whatever you are offered or are eligible to borrow. However, it is
essential to think first carefully about how much you actually need, as
well as to consider other possible options.
Always note that there is in fact no need for you
to borrow the whole amount shown in your award letter. And, even more
important is that, never plan to borrow as much as you can up the
yearly limits because if you do so, expect yourself to be deep down in
debt.
Consider Options That Will Reduce Your Loans
If you are thinking for borrowing money to
support your education, try to ask yourself first if you have savings
left that you can use instead of taking out a student loan from the
school of your choice. Also, think if you can get by with less by way
of holding down expenses, or if you can do something great, like
working more, either in the academic year or during vacations just to
support your education. Also, think for the possible scholarships that
you can apply for, or you can be qualified for. There are in fact a lot
of options left for you out there. The best move to take now is to know
and understand them.
Estimate Your Loan Payments
It is worthy to note that the more you borrow for
your education, the higher is the amount of your monthly repayments
will be once you finish your degree. So if possible, try to estimate
your loan payments. There are a number of student loan repayment
calculators out there that you can use to do the math. What's more, you
have the chance to calculate your monthly payments based on the
estimated starting salary of your chosen occupation.
The Essential Borrowing Tips
Now that you have pondered enough about your
student loan with the things you have to consider before borrowing, as
well as with the amount you need to borrow, it is now important for you
to look at the most recommended tips for borrowing student loans. Just
consider the following:
- Start by looking
at the award letter given to you by your servicer. From the letter,
figure out which need-based loans you have been qualifies for and for
what amounts.
- You should
then consider settling on an amount that you in fact need to borrow
after looking at the full financial picture, such as the awarded aid,
education cost, and family share.
- The
rule is: never borrow more than you require. Always note that as a
student loan borrower, you are not required to take the full amount of
the loan you have been offered.
- Don't
ever forget about student employment as an alternative for borrowing.
Even though working at a job can seem like an extra burden for
students, so is struggling with high loan repayments after college.
- Apply
for the student loan right away. This is very essential particularly if
you want to ensure that the loan is approved as well as the money paid
to the college before you have to make your first student account
payment.
- The key to
successful application is to follow the loan application instructions
cautiously. Note that any mistakes you make will delay receipt of the
funds.
- When you are applying
for a Stafford or Direct student loan, be prepared for the amount that
is paid to the college to be less than the amount you signed for.
Generally, a fee of up to four percent will be deducted from the
student loan. This deduction occurs before the check is sent to the
college of your choice.
- If
you already figured out the exact amount you are borrowing before any
borrowing process begins, you should start keeping track of your
student loan tab, which is what your monthly repayment amount will be
after you graduated from college. There are student loan calculators
out there than can do the math for you.
- If
instances occur that you find yourself needing more than the amount
that's been offered in your award letter, it is essential to contact
with a financial aid counselor before taking on an additional loan.
- And,
if you do take on an additional, unsubsidized loan, just consider
making interest payments while attending your degree. The interest
won't be much and this will help you save money. If you delay or
capitalize the interest payments, you will end up having to pay back
considerably less than.
As mentioned, planning and thinking your moves
for taking out student loans is very essential for a successful
borrowing. If you do consider what have been mentioned above, then
there is no doubt for you not to attain your dream education, and even
a successful career in the future.
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