Your Personal Guide to Student Loans
The thought of taking out student loans might be enough to send any college student running for the hills. After all, according to Forbes Magazine, the average student loan borrower graduates with over $26,000 in debt. While the cost of tuition has been on a steady incline over the past few years, the national student loan debt has hit $1 trillion. While the government is taking steps to fix this, unfortunately, we are not the lucky generation to escape the crushing debt of a student loan.
Since student loans are a necessary evil, your best bet is to take some time to learn more about them. The student loan is any amount of money given to students to cover expenses related to education, such as tuition, housing, meal plans and textbooks. Sounds great, right?
Well, you see, the thing about loans is that you’ve got to pay them back. However, don’t worry! Consider this your personal guide to the wonderfully terrifying world of student loans!
Look at your options
Before you put all your eggs in one basket, that one basket being student loans, make sure that you exhaust all of your other options. Contact your school’s financial aid office to see if you qualify for any grants or scholarships they offer. See if you qualify for work-study! Fill out your FAFSA early every year to make sure that you get all of the best financial aid. As the old saying goes: the early bird catches the worm.
I cannot stress this enough. You must research, research and research. Websites like Fastweb and Scholarships are out there to post scholarship applications for awards that apply to everyone! Are you the child of a single parent? There’s a scholarship for you! Are you left handed? There’s a scholarship for you! Are you studying STEM or the liberal arts? Doesn’t matter. There’s a scholarship for you!
Exhaust every single one of your options before resorting to student loans.
Do your homework
When applying for student loans, you’ve got to make sure that you know every bit of information. Do your research and make sure that you understand the policies. Will they require you to start paying back the loan while you’re still in school, or after you graduate? What are the interest rates? Are there any hidden fees? How much are the monthly payments?
Find out the information to answer each and every one of these questions in order to stay far away from any unwelcome and unfortunate surprises down the road.
Another tip: always take out federal loans before taking out private loans. Federal loans offer fixed interest rates, while the interest rates from private loans tend to vary. Also, federal loans typically don’t require you to start paying back until six months after graduation.
It’s also important to recognize the difference between subsidized and unsubsidized loans. With subsidized loans, the federal government will pay the accruing interest while you’re in college, or while the loan is in deferment. With unsubsidized loans, interest will begin to grow as soon as the loan is taken out. So when in doubt, go subsidized!
Knock out your interest
Speaking of student loan interest, it’s a good idea to knock this debt out of the ballpark early on! You’ll thank yourself four years and six months later. It might seem a bit silly to start worrying about your loans and monthly payments while you’re still taking classes. Let’s face it: we never want to think about being in debt. However, you can make this easier on yourself down the road if you take care of interest payments now.
Pick up a part-time job, or maybe some freelance work, to earn some extra cash. Stash away some funds at the end of every pay period and use the accruing cash to pay off your student loan interest rates. Talk to your loan servicer and see if this is an option for you.
Tighten your budget
You know the phrase “poor college student?” Well, you’re about to start living it, or at least you should be! The endgame is to graduate with as little debt as possible. In order to do so, you’ll have to start living frugally. Frugal, being that word nobody wants to hear, but that everyone needs to hear.
Practice being frugal by tightening your budget in areas you might not have thought about. Walk, bike, or use public transit rather than driving in order to save money on gas for your car. Either live at home with your parents, or with a roommate in order to save on the cost of living. Avoid overpriced campus meal plans and learn how to cook at home (you’ll need to learn to cook something besides Ramen anyway!).
When you’re shopping for textbooks, look for used rentals by using Chegg. Often, you’ll find that their prices are cheaper than your campus bookstore. All of the extra money you save can be put aside for paying off your collegiate expenses to some degree. The more you can pay off on your own, or with scholarships, the less that you’ll need to pay back later on!
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