Student loans can make up the difference between what you
have to pay for college and what you need to make your college
dream a reality. Unlike scholarships and grants, however, borrowed money
must be repaid - most often with interest - regardless of
whether you complete your education or not.
The goal of a student loan is to help get you through school,
not overload you with debt. Before you take out a student
loan, it is a good idea to make sure you understand exactly
what this entails and what it will take to repay your loan.
Think about what your anticipated starting salary and living
expenses will be when you graduate. Then estimate what you'll
be able to afford in monthly loan payments, generally not
more than 8-10% of your gross monthly salary. Be
very careful when choosing a school and make sure that you
can realistically afford to attend.
In the end, your education is worth the investment. As long
as you spend responsibly, work hard, and remember that financing
your education is a commitment that will eventually pay off,
you'll be a successful professional before you know it - loan
debt or not!
How you manage this debt can affect your credit rating and
your ability to borrow later on for a house, a car or anything
else. Defaulting on a student loan can damage your credit
history for up to seven years.
Should you have trouble making your student loan payments,
a deferment will allow you to postpone payments for reasons such as unemployment
or disability. A forbearance is an agreement with your lender to postpone payments when
you are having financial difficulties but are not eligible
for a deferment. Otherwise, to combine your student loan payments
into one manageable monthly payment, you may want to consider Loan Consolidation.
The best way to avoid running into trouble is to borrow for
school wisely:
Remember, all loans, federal and private, are funds that MUST be paid back. After you've exhausted
free and federal money, private loans can make up the difference.
There are a variety of loans, each with its own requirements
and features.
Understand the Basics
The total amount of your loans you will repay will be much
higher than the amount you received because of the interest.
Computing the Costs
You need to look at more than tuition fees when you're evaluating
schools. To get a true picture, figure out the total cost
of attendance, including costs for:
