Going to college has become an expensive affair for most families. The high cost of tuition, room, books, and meals have continued to rise over the years. In fact, according to a College Board survey, the estimated total cost of attending college in the 2017-2018 academic year was $25,290 for a public university and $50,900 for a private college.
As much as funding your college education may be expensive, it’s still a necessity in the job market. A college degree offers better pay and more options for promotions in the workplace. A private student loan can help you complete your college education without stress and the demands of paying for everything yourself. However, with the variety of student loans in the market, you need to consider one with the best offers.
Here are some tips to avoid bad student loan offers:
Estimate Total Costs for College
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Before applying for a student loan, you need an estimate of the total expenses that you will incur. You can do this by using the financial aid calculator from the website of your university of choice.
Figuring an estimated total cost will help you figure how much you need for school. At the end of the loan period, you will be expected to pay back the loan. Therefore, only borrow what you need.
Each lender will have different borrowing terms. Understanding these terms will help you answer some questions you may have: What happens when you are unable to complete college? How long does it take before the interest rates start accumulating? What if you’re late on payments? How about deferment?
You’ll need to compare the best private student loan lenders before applying for a student loan.
Student loans can either have variable or fixed interest rates. Fixed interest rates are constant, while variable interest rates change over time. Interest rates charged by private lenders are based on diverse factors. These factors vary across different lenders who have their own eligibility criteria.
Although federal loans have fixed interest rates, taking out a private student loan from a reputable private lender may offer variable interest rates that are cheaper in the long run than fixed interest rates.
Each lender will have unique repayment options that may or may not be suitable for you. Some private lenders might expect repayment while you’re still in school.
Generally, the longer it takes you to pay the loan, the lower the interest rate, and vice versa. However, if you take more years to pay the loan, the interest will be much higher compared to paying within a few years.
Consider Combining Different Funding Options
It’s crucial to remember that taking out a loan is an important financial decision, a decision that will affect your finances in the future. You need to be intentional about how you are going to spend the money. You can take a part-time job, apply for scholarships, make a budget and stick to it, and keep track of the loan through the years.
Getting that bachelor’s degree, master’s degree, or doctorate means more opportunities and earning potential for you. Taking a loan to finance your education can be a great investment for your future.