The Ins and Outs of Student Loans
What You Should Know About the Ins and Outs of Student Loans to Help You Prepare for the Future
With the average cost of a private college education over $30,000 parents everywhere are struggling to make ends meet and help their sons and daughters get the education they need. Unless you are independently wealthy, your future college plans will probably involve some sort of loan.
Whether your offspring are on the cusp of college or not yet in kindergarten, the time to start planning is now. Here are some key things you need to know about student loans.
Student Loan Debt is Not Dischargeable
Credit card balances and many other forms of debt are dischargeable in a bankruptcy, but student loan debt is an exception. Once a student, or a parent, signs the paperwork they are responsible for paying back that money.
That is why it is so important to think carefully and be realistic when taking out a student loan. There are ways to economize and reduce student loan balances, from attending a public university to combining work and classes.
Not All Student Loans are the Same
Student loans run the gamut, from Federal student loans backed by the government to private loans from local and national banks and credit unions. There are also state loans and loans directly from the college or university.
Each of these loan types comes with a different set of terms and interest rates, so it is important to do your homework and understand your responsibilities to the lender. Federal loans generally have the lowest interest rates but often come with more restrictions that private student loans.
Once you leave school, you will be expected to start paying back the loans you used to put you through college. Even so, repayment terms vary, and it is important to understand those terms and how they will impact your post-college life.
One of the biggest advantages of Federal student loans are there flexible repayment options. Students who used Federal loans to go to college can tie their monthly payments to their income, extend their payment schedules and combine multiple student loans into one.
Private lenders may offer the same type of flexibility, but the repayment terms will vary depending on the institution. Always check the repayment terms before taking out the loan, and think about the impact those loans will have on your finances.
It is a good idea to think about the worst case scenario when evaluating your student loan repayment options. What if you fail to secure a job right after college? What if the salary for the job you do get is not as high as you hoped? Taking those things into consideration will make all aspects of the student loan process, from choosing a loan to paying it back, a lot easier and less stressful.
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