While taking out a college loan can be a valuable resource to afford a higher education, it is incredibly important to consider a few things before you do. About 60% of people who go to college take out student loans to supplement their tuition and other costs, but it can have serious implications, especially if you have trouble paying it back. Out of all the students that do rely on loans, a staggering percentage is having trouble paying them back. This is not the fault of the lender or even the interest rates, but mainly because of the dismal job market. Basically, new college grads are finding it harder and harder to find work.
Here are 5 things to consider before taking out student loans.
Make sure that you read between the lines. Often there might be hidden fees or changes of interest rates, which can severely affect your chances of ever being able to pay back your loans. A financial aid counselor should be able to guide you through all the terms of your aid package so that you aren’t missing anything. If you are, they will certainly point it out or answer any questions that you might have.
There are different types of financial aid that are available, so it is important to know which one works best for you. There are financial aid programs that offer loans that you will need to pay back or you can apply for a state or federal grant, which is essentially free money to be applied to your higher education that you don’t need to pay back. It’s wise to find out what you are eligible for, before you sign up for anything.
Next, make sure that you are on a career path that makes your financial aid sustainable. The last thing you want is to have an outstanding student loan that is bigger than your future earning power. Moreover, it might be wise to see what some of the statistics are of the job market for the specific industry you are interested in. If you apply for financial aid, you want to be sure that you have a pretty good chance of landing a position after college that would make paying back your student loans possible.
Also, remember that once you take out a loan the debt will be there until you pay it back. No matter if you are going to Washington State University or Kensington, after you graduate you must find a way to pay back your loan or devise a payment plan so that your loan doesn’t negatively affect your credit score.
Lastly, research the school you are going to and the rates of success that the school’s graduates have finding positions after college. If you are making your initial choices for colleges, you might want to do this research even before you apply, especially if you know that you will need to apply for a student loan. Not only will this give you better security and motivation, but it will give you the much needed confidence that if you do take out a loan that you will be able to pay it back after you graduate.
4 Comments
I would almost turn those five things to consider into 20 things to consider because it might take you 20 years to pay back a student loan. I just couldn’t bring myself to get into heavy debt by going to a 4 year college. I ended up joining the Air Force for seven years and then started a career as a police dispatcher. I might have been able to earn more money but I would have also been in more debt.
Very true. It can take a really long time to pay off student debt. It’s better to keep that in mind before you start furthering your education.
If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan . This may simplify repayment if you are currently making separate loan payments to different loan holders or servicers, as you’ll only have one monthly payment to make. There may be tradeoffs, however, so you’ll want to learn about the advantages and possible disadvantages of consolidation before you consolidate.