As the cost of college tuition continues to rise, many parents and students are increasingly turning to private and federal educational loans to fund college education expenses.
Here are five things that you should consider to get the most out of your student loans.
1. Compare financial aid offers
To minimize the amount of money you may owe after graduation, students should compare financial aid packages between schools. Your financial aid package, including scholarships, merit-based awards, and need-based financial aid, will vary from school to school. Comparing the tuition costs and financial aid programs could help you save thousands over your college career.
2. Borrow only what you need
Federal and private student loans can be instrumental in helping you cover the cost of attending college. While it may be tempting to take out more than you need in student loans and live a more comfortable lifestyle, it is important to remember that once you graduate you will be required to pay back those loans.
You should borrow what you need to live comfortably during college, but not in excess, as you may find that you won’t be able to afford your repayments after graduating. For extra spending money, look into working part-time during the school year or saving money over the summer.
3. Shop around for private loans
As no two private loans are the same, it makes sense to shop around for different private loans and compare offers from multiple lenders. Some lenders attach fees to their loans, while others can offer discounts after your first year of scheduled repayments.
These are factors that should be taken into consideration before you decide on which loan is right for you. Choose the loan and lender that not only suits your needs while attending school, but also for the future.
4. Stay actively involved in the process
Your student loan lender should offer several resources to keep you informed throughout the lending process. Stay in touch and ask questions about interest rates, terms, and what estimated repayments will be after graduating.
Make sure you understand all of the forms you are signing when you take out your loan. Simple things such as knowing if your loans have fixed or variable interest rates could save you time, money and headaches over the course of your repayment term. Ignorance is not bliss in the world of lending, so do your best to educate yourself.
5. Consider interest-only repayments while attending college
Generally, some federal loans and most private loans will accrue interest while you are attending school. This interest will compound onto your loan balance, and will mean that you may have a higher principal balance after you graduate.
Paying some or all of the interest that accrues each month will help to keep the principal balance from growing and could save you thousands of dollars over the course of the repayment term.
Student loans are a valuable resource that can help students cover the upfront investment of gaining a college education. By considering the tips listed above, parents and students can ensure that they get the most out of their student loans.
If you’re interested in taking out a private student loan, check out Credible to compare rates across multiple lenders by filling out just one simple form.