College is expensive and finding the funds to get you through the first four years can be exceptionally challenging. But before you take out student loans read this.
First of all, not all banking institutions and loan providers are on the up and up. Many will tell you what they think you need to hear in order to guarantee that you choose their products over the competitors. Research these entities with as much thoroughness as you would a scholarship opportunity.
Given the rollercoaster ride our economy is on, many banks are closing or selling their branches. Terence McCarthy St. Pete announced just such a situation with First Bank. Be sure the banking entity you are considering has some firm and documented longevity behind it. But there’s more to choosing a loan provider and hopefully the following piece will help you make an informed decision.
Essential Information About Student Loans
While the job market might look promising for those who are current graduates, walking out of college with tons of debt is certainly not ideal. Since the average debt for today’s graduates is nearing $40,000 students looking to enter college need this essential information about student loans:
- Save money with direct debit. Making automatic student loan payments will make the process convenient. And, over time, you’ll save about .25% interest off the rate you are offered.
- Consolidation makes life easier. When you bundle those hefty payments into one loan it’s easier to manage making them. Plus, you could be able to lock in at a lower interest rate than what your initial loans provide. And, there are a number of repayment options, some of which are based on income.
- Loan forgiveness could be included in your job. Those students who are seeking to enter the field of public service can see their loans wiped clean after 10 years of on time payments and continued employ in that field. It’s a great reason to become a teacher or work for a non-profit organization. Learn more.
- Payments don’t have to start the day you walk across the stage. There’s a six-month grace period before you have to start paying the loans back. And, there are other loans that offer even larger repayment gaps.
- Get a tax break. While having to pay back student loans isn’t the ideal situation, it is a reality. At least there is the potential to deduct the interest you pay on these loans from your income taxes.
- Going into default is a bad idea. Default means that you fail to pay your loans back. And, it comes with some very serious consequences which can include wage and tax refund garnishment. Add to that the fact that companies will sell your unpaid loans and you’ll rack in the exorbitant interest rates these servicers tack on to your already unmanageable debt.
- There are options if you can’t pay. Federal student loans offer a variety of payment options should you discover that you are unable to pay them. Job loss could qualify you for forbearance, which will temporarily halt the payment requirement until you can find another job. The interest will continue to accrue but at least you won’t be in default.
- Private loans and federal loans are very different. Private loans are a lot more stringent and are not eligible for the public service loan forgiveness program we mentioned earlier. Click this to better understand the differences.
We know that you might need to take out student loans to afford college. But, don’t do it until you are certain you grasp all the ramifications listed here. If you need more advice, this is a great resource.