Your education is extremely important but getting that education can also be extremely expensive. Many people take out student loans in order to pay for the education they want. There are a few tips to follow in order to make sure you get the most out of your student loan without overpaying or harming your financial future. Take a look!
1. Look For Scholarships
Before you start applying for loans to cover your education, take a look at what scholarships or grants you may qualify for. There are many websites where you can look for scholarships and your school will also have their own scholarships. Scholarships and grants do not need to be repaid which means you will receive the money you need to fund your education without any debt. Apply to as many as you can in order to get ‘free money’.
2. Federal vs Private
Applying for a federal loan is something you should do right away when you consider paying for school. Federal loans have several benefits when compared to personal loans. For example, federal loans have fixed interest rates, offer deferment periods and do not require a cosigner. In addition, filling out a Free Application for Federal Student Aid (FAFSA) form can guide you toward other federal grants and loans you may qualify for. Always look at federal loans first when taking out student loans.
3. Private Student Loans
When you have maxed out the number of federal loans you can take out, you may still need to turn to cash loans. Each lender will offer you a different rate which could be based on your credit history, your future income projections and how many loans you have already taken out. Shop around and find a lender that can give you the best rate on private student loans.
4. Payment Terms
While most federal student loans begin repayment schedules once you have graduated, a private student loan may not operate in the same way. If you are applying for a private student loan, look at when you need to start paying the loan back. Some may ask you to begin payments immediately while others could start repayment several months after you graduate. Be sure you can abide by the loan terms and will be able to make payments on time as designated by your loan.
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While you may have been accepted into the school of your dreams, you may want to consider a more economical community college. Local colleges often offer courses that cost much less for state residence and you can take these inexpensive classes to get credits you need. Take a few summer classes at a community college then transfer those credits to your dream school. You will save money and still be able to go to the school you want to.
6. Plan Your Classes
If you have already decided on a major, you will know exactly what classes you need to take in order to graduate with your degree. Plan your classes all the way through graduation in order to budget for the next few years. You may be able to take discounted summer classes that could save money or take heavier class loads in order to graduate early (some schools charge annual flat rate tuition no matter how many classes you take). Make your budget then assess how much of a loan you will need.
7. Save Money When You Can
Cutting your day to day costs can help you greatly while you are paying for your education. Try to live at home or with a roommate in order to save on rent. Sell your textbooks after you complete a course. Utilize the tax benefits of being in school when you file your annual taxes. And, of course, try not to fail a class requiring you to pay for it again.
Student loans are very common and chances are, you may need one now or down the road. Be prepared and use your loan in a responsible and smart way. Now, get back to studying for those classes!