What To Know Before You Borrow Loans for School
If you’re on track to start your first year of college this year or next year, you should learn everything you can about the financial effects of the loans you may take out. When you decide to take out a student loan or two, you’re making an after-college commitment to pay it back in monthly payments. If you are thinking twice about this long-time commitment, you still have other loan options for you, just like short-term loans you can get from pawn shops and other financial institutions. You likely have a long way to go before you need to worry about making payments on your student loans, but it’s important to keep this list of what to know before you borrow loans for school in mind.
Know Whether You’re Borrowing Federal or Private Student Loans
While there are pros and cons to both, make sure you know whether it’s a federal or a private loan. Educate yourself on the differences between the two before choosing one or the other.
While private loans tend to have lower interest rates, they don’t benefit from many of the decisions that the government makes about student loans. Some private lenders require loan payments while you’re attending school—federal loans only kick in either six or nine months after you’ve graduated college.
Make the Most Out of Grants and Scholarships
Your parents aren’t pushing you to apply for grants and scholarships for no reason. Competitive grants and scholarships provide you with money for college that you don’t have to pay back. Merit-based scholarships from colleges can take out large chunks of the tuition that you would otherwise need to pay.
Even smaller grants or scholarships can add up and decrease the size of your loans. Free money for college now means more money in your pocket later. Applying for scholarships can help ease the impact of student debt in your future.
Ask if You Have Multiple Student Loans
If you’re not involved in the student loan process with your parents, you may not realize until after you graduate that you have multiple student loans. Make sure that you understand the loan borrowing process. Figure out how many loans you have and how much you’ll need to pay, if applicable. If you need to pay multiple monthly payments for different loans during your education or after, it must be on your list of what to know before you borrow loans for school.