College Student Loans – Where To Begin?

If you’ve ever looked into college student loans, you know what a headache it can be. There are so many facets to the subject you can easily get bogged down in jargon and misunderstanding. Though most colleges have financial aid advisors on hand for people like you, you can also learn a few things on your own before you venture further.

First, get to know the different types of loans. There are government student loans, online student loans, and privately-funded student loans. Though this may sound cut and dry, it’s not. Government loans can actually be privately funded through subsidization and online loans can actually fall into both categories. It’s mostly all about what channels you go through to acquire the loan.

You also need to know that you can get student loans bad credit. Keep in mind is that payments on student loans are deferred as long as you are in school. Because of this, lenders feel safer making loans to people with bad credit. Lenders bank on borrowers graduating from college and getting a high-paying job that allows them to pay off their student loans. This may also allow you to get into a student loan much easier than you would a normal loan. You may get stuck with a higher APR because you are considered high-risk, but at least you’ll get the loan. Another thing to think аbout: who do most student loans go to? They go to new college students, people who usually don’t have great credit. Chances are they have no credit at all. They don’t necessarily have bad credit, but sometimes that’s just as bad. Once again, lenders are willing to gamble that college kids with no credit are going to come out of school and get a great job that will let them pay off their debt.

Next you need to understand the various methods out there that can help you repay student loans. You can either consolidate student loans or refinance student loans. The government even allows government student loans consolidation and refinancing. Both of these methods are great because they save you from making large monthly payments that you cannot afford. Consolidation cost you more in the long term because it will take you longer to pay off your debt, thus allowing more interest to accrue. Refinancing, on the other hand, allows you to get a lower APR (annual percentage rate) and save money altogether because you are being charged less interest. This will often let you pay the loan off quicker.  

Conclusion

In general, before you thrust yourself into the world of student loans, educate yourself and find out as much about them as you can. Get to know the different types of loans available, and who exactly will be holding your loan. This will help you in a few years when it comes time to start paying off your student loans. By understanding every facet of your loan, you are less likely to be surprised by anything concerning it. College student loans are a necessary evil, but don’t be intimidated.