The primary idea of an education loan makes a great deal of sense and is really helpful when you think you need more money for pursuing your higher education but you don’t have access to a huge amount of money. This isn’t only about you but several students who have recently graduated don’t have enough money to pay the college fees for pursuing their higher education by themselves that also incorporates tuition fees, accommodation, charges of study material, and whatnot.
For many families also, it is difficult to pay huge amounts of fees for the higher studies of their children. However, student loans may be the one thing that will make your dreams come true. So before opting for an education loan there are some key points that you need to keep in mind
Education loans are part of the financial aid package
Most people associate financial aid with grants and scholarships or free help but education loan is also part of the package. They technically serve as a help to pay for college, keeping the fact that they must be paid back after graduation. When you secure your financial aid package from college, don’t assume that everything listed is grants or scholarships. Look carefully at each item, and call your financial aid office if you have any queries.
Two types of federal education loans
Federal loans are divided into two categories: subsidized and unsubsidized. Subsidized student loans are for students who have financial aid, and the federal government pays the interest while you’re in college. Unsubsidized student loans are available to all students, regardless of financial need. However, students are responsible for paying all interest on the loans. To be eligible for both of these loan options, it’s compulsory for students and their families to submit a FAFSA.
Though you may be awarded federal student loans in your financial aid package, there are chances that they still might not cover the total cost. To find a private student loan, reach out to your school’s financial aid office, and ask about their preferred lender list. This list is put together by the schools and offers a comprehensive look at who they work with, which might be helpful as you navigate the private loan arena.
Loan payments aren’t due immediately after graduation
Luckily for borrowers, graduation does not bring an onslaught of student loan bills. Rather, you’ll get a six-month grace period during which no payments need to be made. This allows students to find employment before they have to take on monthly loan repayments.
Student loan forgiveness
If you are not able to pay back your student loans, it can be forgiven but isn’t easy, you have to meet quite a few requirements. Forgiveness requires that you have a job serving in the public sector with government organizations, not-for-profit, and other types of qualifying public services like law enforcement, teaching, and military service. Though, you should always plan your student loan repayment so that you don’t need to face such situations in the future.
Student loans can’t be dissolved through bankruptcy
While most debts can be terminated through bankruptcy, student loans don’t come on the list. They are with you for life, that is until you pay them off. It should be remarked that if you stop making payments on your education loan, the federal government has the right to start taking your wages from work in order to pay the debt. It’s best to make the payments on time and continuously.
Don’t borrow more than you can realistically repay
This is a good rule of thumb: don’t borrow more than your starting annual salary. Research potential careers, the field you’re planning to go for and their salaries, use that data to set an amount that you’re planning to borrow. Borrowing more than what you expect to earn in the future will result in paying off more debt for many years. Essentially, don’t borrow more than you will be able to pay off.
Education loans should not be taken casually. Getting to know everything about them sooner rather than later can help you plan better for borrowing and repaying. Fortunately, you can reach out to UniCreds as they provide plenty of student loan help regarding everything you need.