4 things to know before taking out a student loan
Updated on July 10, 2020
Rising tuition costs are creating additional roadblocks for students hoping to attend college, resulting in close to 70 percent of college students taking out student loans. The loan process can be difficult and tedious because of the various lenders, rates and fees, but it doesn’t have to be impossible to find a good loan for you. But what should you know and do before you take out a student loan? Here are four things to help you better prepare.
1. Remember to budget beforehand
Before you take out any student loans it is imperative to go through your finances and budget how you are going to pay those loans back. When you’re not making payments it’s easy to borrow money, but once you graduate everything changes. First, estimate where you’ll be in four years when you graduate and then estimate your repayments per month.
2. Borrow exactly what you need
When you’re preparing to take out student loans, make sure to crunch the numbers to ensure you are only borrowing what you need. This could include tuition, cost of living, books and supplies, a meal plan and more. When you are offered a loan, remember you don’t have to accept the entire amount. So if you can cover some of the expenses, accept a lower amount so you’re paying back less in the future.
3. Think about working during school
Many college students work either part of full-time jobs while taking classes and this could be a good option for you. This will allow you to cover some expenses and take out fewer student loans, leaving you in less debt in the future. Take advantage of your school’s work-study program or search for a job in the local community.
4. Get multiple estimates for private loans
Before you pull the trigger on a loan, shop around for private loans to see which lender has the best fees, interest rates, repayment plans, penalties and more. You don’t want to get stuck with a high interest rate when a much lower rate was available. See what lenders your college or university suggests, do your own research on lenders and compare the variables.
For more information about student loan options and what to do before you borrow, contact StudentLoanify.