Planning for college can be a daunting task for most people. With the costs of a college education on the rise, more and more people are turning to student loans to help them cover the costs. These loans come in several forms, but are basically broken down into two groups: federal and public loans, each with its own advantages and disadvantages. But regardless of where the loan comes from, there are a few things to keep in mind when applying for these loans:
1) Prepare a budget
Prepare a budget that outlines the expected costs of living while attending college as this will give you an idea on how much money needs to be borrowed. Major expenses like tuition, books, transportation costs and rent are important to consider, but also remember to account for the cost of the lifestyle you intend on keeping. Talk to the financial aid office at the institution you’re thinking of attending as they can help you determine some of these costs rather than using an unrealistic guess.
2) Only borrow what you need
Once you’ve created your budget and are confident in your cost estimates, try not to over-borrow as it will make life easier once you’ve graduated and want to start saving for that first apartment, car, trip, or whatever.
3) Don’t leave it for the last minute
You don’t want to wait until the last minute to start looking for a student loan. Consider starting to look into your loan options as soon as you start researching your college options.
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Sometimes the schools you apply to may recommend a particular lender if you are considering a private loan but don’t be afraid to look elsewhere to see if you can find a more suitable offer.
5) Be aware of the terms
Details such as the amount to be borrowed, the total cost of borrowing, the interest rate, repayment terms, fees, and important dates should be outlined in the documentation. It is your responsibility to read and understand all the terms and conditions that go along with the loan as you will be held accountable to those terms once you accept the loan.
6) Compare your offers
If you have submitted multiple applications for a student loan and more than one comes back with an approval, don’t just jump on the first offer. Make sure you compare the terms of each offer to see which one not only suits immediate needs, but what your needs will be throughout your college education.
7) Don’t rely on student loans alone
In addition to a student loan, consider applying for grants and scholarships that may be offered at your school or within your community. Or apply for an on-campus job that can help pay the bills while you gain work experience in a work environment catered to student life.
8) Start repaying early
It’s easy to get caught up in borrowing money when you don’t have to repay that right away. If you find yourself with a few extra dollars, you may be able to pay down some of your loan early, saving yourself the interest that would normally accrue over the remaining time you have left in school. This mainly applies to private loans where the interest on the loan begins to accumulate from the day you borrow the money.
9) Consider fast-tracking your degree
While this may make life a little more hectic, but finishing your degree early may save you some money and thus reduce the amount of money you need to borrow.
10) Have a back-up plan
These may not be the words you want to hear, but the loan(s) you are counting on to pay for your educations may not materialize. Have a back-up plan for where else you may be able borrow money such as relatives or a private loan at the bank.
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