What should you consider before choosing a student loan?

Before you choose a student loan, it is essential to make sure you have all the facts you need. It can be easy to avoid taking the time to research and just choosing the first name that is on a list or the one your best friend used, but that may not be the right choice for you. In order to have the time to consider all of the options you cannot wait until the last minute to register for school: give yourself at least a month to research your financial aid package and make inquiries.

Consider All the Types of Loans

There are different types of student loans thus giving students and their parents a variety of choices to make. The choices that are available to individual students depends on where they live, where they attend school, and the different organizations that are willing to work with each school to provide financial aid. If you're thinking of a private student loan, these can be secured or unsecured with secured loans being the preference of lenders when the applicant has bad credit. Although unsecured loans are given to those with good credit, they also tend to carry higher interest rates than secured loans.

Analyze and Evaluate Your Choices

There are several factors you have to consider before you make a decision about a student loan. It's important to carefully think about these factors and make your decision carefully.

  • Are you in a financially stable position to make payments on a loan?
  • Do you anticipate being able to handle long-term debt when you graduate from college? Keep in mind that your student loans will have repayment terms of ten years or longer.
  • Do you fully understand all the terms and conditions of the lender?

Even if the lender or student loan program you choose has a deferred payment plan, you will have to begin making payments within six to nine months after you graduate. You need to be financially able to do that, remember that if your parents co-sign on the loan and you are unable to make the payments they will have to do so.

Student Loan Options

Before you make a final decision it is important to conduct research into different options. One of the most important elements is the interest rate. In addition to varying rates, you will also find that there are both fixed and variable rate loans—the federally sponsored student loans like the Stafford Loan and Perkins Loan always have fixed rate while private student loans tend to have variable rates. You also want to be careful of any hidden fees that may be attached to the loan. In short, know the terms and conditions of the loan before you sign any papers.

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