5 Things to Know Before Getting a Student Loan

Things to Know Before Getting a Student Loan

Your high school days are finally over and you are ready to enter the next stage of your academic career. For most, this is college. However, between choosing your classes and checking out your future roommate’s Instagram, there is one thing that can make you restless. That is figuring out how you are going to pay the bills.

The chances are you will need a loan to pay for your education. These student loans are usually from the government or a private lender. A private lender can offer lower interest rates than other types of loans and a longer repayment period. In case you transfer more money than you should, it'll come back to you.

Due to the pandemic’s negative impact on education and work, lenders and the government have become more lenient towards loans. In fact, the Biden Administration voted for a student loan forgiveness 2022 extension. This is valid until the end of August of the same year. In other words, you can rest easy if you don’t repay your student loan on time.

However, in the meantime, here are a few important things you should know about student loans.

Student loans can only be used in relation to education

Any excess loan amount you have can transfer to your bank account and you can use it as you need. For example, if you decide to live on campus during your studies, the student loan can cover your semester fees as well as your living space.

The remaining money can also cover the cost of all the materials, books, and student basic needs. Not to mention, transportation costs to the school. However, you cannot use your student loan to pay for a vacation or purchase anything that isn’t school related.

Choose between federal and private student loans

When choosing between student loans, you can get federal student loans or private student loans. The first can be granted by the government and offer additional benefits. For example, you can start your repayments after you graduate, with a fixed interest rate. You can also postpone these loans and you don't even need to have great credit to get one.  If you are considering private student loans, a SoFi graduate student loan is one option to explore.

Private student loans, are granted by a lender, a bank, or a school. While some loans are payable after graduation, others require that you make payments while you study. Lenders will check your credit score before they approve you for a loan. Refinancing is an option, although it can be difficult to postpone debt.

Only take the amount you need

According to a Forbes report, an average student has a student loan of $28,950. This amount is not easy to repay and will most likely grow with the rising interest rates. That’s why it is important that you only take what you really need.

If you are looking for greater financial support, you can look for a part-time job or try to apply for a scholarship. These opportunities can reduce your expenses by as much as half and can even help you borrow less money.

Start saving up

Saving up is another great way to repay your student loans. Even if you’re not able to get the whole sum, you can start saving $1 a day and it will make a big difference in the future.

If you need help doing so, there are many strategies you can rely on to help you manage your finances effectively. Some of the most common ones are cutting down on unnecessary expenses. For example, take-out meals, avoid impulse shopping sprees, buy or rent used books, and opt for a shared living space.

If you want, you can make use of online tools and applications to help you track your spending habits and be a better saver.

Apply for a scholarship

Many people believe that scholarships are for freshmen. If they meet the criteria, seniors, juniors, and even sophomores can receive scholarships.

You can find information online, or you can contact the university to get the details you need. However, keep in mind that it will require a detailed process with many formalities.


Final thoughts

There is no denying that going to college can be quite expensive. This is why students have the opportunity to get student loans to help pay for their education. These loans can be granted by the government or a private lender, with a lower interest rate and longer repayment period than other types of loans.

To find out more about student loans, refer to our post and learn everything you need to know before you decide to get one.

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