Factors to consider before taking out a student loan
Updated on November 22, 2019
Taking out a student loan can be a huge financial burden after graduating if you don’t repay on time. It not only affects your monthly income but can affect your credit, career, family, and sustainability. Thus, deciding to take out a federal student loan is a vital decision that needs a lot of thought.
Students have different reasons for applying for student loans, but the most common is the high college tuition fees that keep rising each year. Most average income students can’t afford to pay this and require alternative options to put themselves through college.
If you’re thinking of how to pay for your college, here are some factors you should consider to make an educated decision.
1. Understand the different types of loans
Some student loan options include private, federal, and bank or credit loans. All these loans have their terms, eligibility requirements, interest rates, and repayment periods. Thus, understanding how each works helps you establish which loan suits you best.
Compare and contrast each loan and identify the benefits of each for your future. For instance, federal student loans offer repayment options like student loan forgiveness, forbearance, and deferment, which don’t strain your finances.
2. File for federal aid early
Many students don’t apply for FAFSA (Free Application for Federal Student Aid) using old tax returns, and some parents aren’t aware that it exists. Filling FAFSA is vital for students who can’t afford tuition fees as they may be eligible for the Pell Grant program.
You don’t have to pay back for this program, unlike federal student loans. Complete your FAFSA application as early as possible to compare financing options and aid packages.
3. Understand the impact of debt
While student loans are a great investment in your future, you need to understand how much you owe and how student loan debt works. For instance, what are the implications if you fail to meet your repayment terms?
Student loan debt can affect your accessibility to loans in the future and credit scores.
At StudentLoanify, we can help you understand federal student loans better and guide you on repayment options. Contact us today for assistance with your federal student loan.