If you have decided to join a university or college for a degree, you will likely be looking for a student loan that can help you pay for the college education. And though these loans will put you in debt for several years after graduation, it will be worth it if your degree enables you to get a job with an excellent salary. Below, we look at seven tips you must keep in mind when taking a student loan.
- Consider First Year Salary
Have a good idea of the salary you will get during the first year after graduation. And ensure that you will be able to comfortably make the monthly payment from that salary. If you take a loan that has a monthly repayment amount which will eat up a major portion of your salary, you will find it very difficult to make both ends meet right from the first year of graduation. This can put too much stress on you. By ensuring that you will be able to make payments from the first year salary, you can guarantee that repayments become easier as the years pass by since you will be earning more down the road.
- Study The Financials Of The Loan
Know very clearly every financial aspect of the student loan you intend to take. This includes understanding the total cost of the loan, interest rate calculation that will be used, fee that will have to be paid in case of late payment, whether the monthly payments can be changed, whether the lender will accept extra payments, and so on. This will allow you to formulate your loan repayment plan in a better way. And in case there are some things that you find difficult to understand, consult the lender for student loan help and clear all your doubts.
- Opt For Federal Loans
As far as possible, try to get a federal loan rather than a private student loan. Federal loans come with fixed interest rates. Hence, you will know exactly how much to pay in interest during the term of the loan. They also provide the option to defer the payments. This allows you to avoid repaying the loan during certain intervals, like unemployment and so on. Finally, you don’t need a cosigner to be approved for a federal loan. As such, even if you default on the loan, you alone will be made liable for it and no one else.
- Look For Free Money
There are also many scholarships and grants available to eligible students. The eligibility criteria are often a mix of merit and low household income. Try to apply to as many scholarships as possible. Even a partial grant or scholarship will go a long way in reducing the burden of your college expenses.
- Work Part-Time
It is also a good idea to start working part-time while in college. You can use the income to repay a portion of the loan and consequently, you will have less debt to deal with when you graduate. For example, imagine that you take $30,000 as a loan for a three year course. You might just be starting college. If you find a part-time job that allows you to pay $200 per month towards the loan, you can actually cut back the debt by almost $7200 by the end of the year. And once you graduate, you will have less than $23,000 (plus interest) to repay.
- Grace Period
Every student loan will come with a grace period during which you will not be required to repay. Usually, the first six months after graduation are considered as a grace period. From the seventh month, you will have to start making repayments. If you think you might need a bit more time, then be sure to talk about this with the lender. Some of the lenders are pretty lenient and may agree to extend the grace period for up to 12 months after graduation. However, do not expect anything more than that.
- Take Short-Term Personal Loans
You will always find plenty of short term personal loan options. Assuming that you are just in your twenties when you graduate, it is recommended that you opt for short-term loans. This is because you will have the least financial obligations during your twenties. You will most likely be unmarried with no kids. As such, you will be able to save more money and pay off the loan faster. The best way to start is to put Personal Loan Request and get all necessary details on how it works.