Before you search for the best student loan
"Before you search for the best student loan" submitted by SchoolGrantsfor Editorial Team and last updated on Tuesday 26th April 2011
Before you search for the best student loan out there, you need to take advantage of funds available through scholarships and grants offered by the government, charities, workplaces, professional organizations, etc. After you have received all you can in scholarships and grants, your next option is a student loan.
Here are some things to remember:
Go with the federal student loan programs. Federal programs such as Perkins and Stafford Loans for students and PLUS Loans for parents and graduate and professional degree students have fixed interest rates ranging from 5 to 8.5 percent. Private or alternative loans typically have interest rates that rise and fall with the economy. Private loans require credit reports; federal student loans don’t (except for PLUS Loans). Check also Federal Student Loans vs. Private Loans
Before You Determine:
Check the terms and fine print carefully. Not all students can take advantage of all the benefits lenders advertise. Choose the loan that offers the best up-front discounts, such as waiving either origination and default fees, or other immediate discounts. Benefits that are promised several years down the road usually won’t help you if you consolidate your loans or get into financial trouble.
There’s an interactive repayment calculator at http://studentaid.ed.gov/ repaying, click on “Paying Back Your Loan.”
- Your entire loan balance (principal and interest) will be due in full immediately.
- Your college records may be placed on hold.
- You’ll lose your student loan deferment options.
- You won’t be eligible for additional federal student aid.
- Your account may be turned over to a collection agency and you’ll have to pay additional charges, late fees and collection costs, all of which become part of your debt.
- Your credit rating will be damaged for several years because defaulted loans are reported to national credit bureaus.
- You’ll have difficulty qualifying for credit cards, a car loan, a mortgage, or renting an apartment (credit checks are required to rent an apartment).
- Your federal and state income tax refunds can be withheld and applied to student loan debt. This is called a tax offset. You may have a portion of your wages garnished (withheld).
- You may not be able to obtain a professional license or get hired by an employer that performs credit checks.
- Student loans have become a fact of life.
- Make a budget and stick with it. Be careful with credit card spending.
- Borrow only what you need.
- If you don’t understand something, call your lender or your financial aid office.
- Keep all student loan documents in a file.
- Open all your mail and read everything pertaining to your student loans.
- Keep in contact with your lender or servicer.
- Make all regularly scheduled payments.
- Ask your lender for help if you have difficulty making payments.
- There are options for you.
- Borrowing is an investment in your future