6 Things to Know Before Taking Out a Student Loan
Everyone has to find a way to pay for their education. Luckily, you probably qualify for a student loan. Things change rapidly in the student loan world, and it’s to your benefit to know what’s happening. You’ll want to know several things, including the current state of student loans from the top down. Here are the top six things that should be on your checklist:
- Know Your Credit Score
If you’re applying for a student loan, you’ll need a credit report and a credit score. Although it’s a part of the paperwork, you’ll probably want to know your current score. If you’re a traditional student, you may have no established credit. This could potentially hurt you if you don’t have a cosigner. If you’re a non-traditional (read: older) student, you’ll want to correct any recent blunders before applying for an education loan. - Know Your Cosigner
Who will bail you out in case you can only work at Starbucks after graduation? Traditional students especially need to know who will cosign their loans. Usually it’s your parents, and most federal loans make this process simple. But if it’s a grandparent, sibling, spouse, or other benefactor — make sure you’re aware of their credit scores and financial history where appropriate, and make sure you make good on the loan. - Know Your Loan
What kind of student loan will you have? Pell, Perkins, Stafford? PLUS Loans? Sallie Mae? You need to know which type of loan you’re applying for, and which type(s) best suit your specific needs. There’s a lot of literature on the subject, and it can be difficult to navigate — but maintain patience, as you’re planning to pay for an investment in Future You. - Know Your Expected Income
One extremely important but oft-undervalued facet of the student loan process is estimating your expected income after college, and adhering to or surpassing that estimation. This theoretical number will help you decide what type of loan to get, who cosigns, what a worthy loan looks like, and how far into debt you can safely go for your education. Nothing is set in stone, but if you’re an accounting major with real-world goals (for example), your income is possible to intelligently estimate. No number is written in stone, however, and you’ll need to be prepared for the worst — and the best! - Know What To Expect
Identifying key point people or organizations that you’ll deal with during the loan process is important and beneficial. And being aware of the limitations of student loans (they’re not a go to college free card; you don’t always get what you need) keeps you realistic and pragmatic. Your student loan will be the gateway to an education, but don’t let the process intimidate you. Arm yourself with knowledge and curiosity, and leave no stone unturned. - Know About Loan Forgiveness
You might not have to pay for your education if you have a passion for saving the world. There are many ways that you can have repayment of loans stalled or cancelled for entering the public sector. StudentAid.Gov says: “In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to enter and continue to work full-time in public service jobs. Under this program, borrowers may qualify for forgiveness of the remaining balance due on their eligible federal student loans after they have made 120 payments on those loans under certain repayment plans while employed full time by certain public service employers.” Check out Teach For America and the Peace Corps, as well.
Where there’s a will, there’s a way — and if you want an education, there’s a way to pay for it. Do your homework, take time in your research, and stay focused, organized, and on the ball. Education should be the most important thing in your life; treat it (and how you pay for it) as such.
Further Reading:
Forbes: Six Things to Know Before Taking Out a Student Loan
Student Loan Consolidation: What You Need to Know Before Getting A Student Loan
Federal Student Aid: Student Aid On The Web
Leave Comments