So what do you need know about loans for college? I'll explain what a college loan is, the different types of loans, and then explain why you should use them as a last option.
A loan is simply when you borrow money from any institution, company or bank. When you take a loan out you sign agreements stating that you or your parents or both are responsible for the repayment of that loan. You can also have other cosigners but for the most part it's just you and your parents. Loans for college also come with interest.
How much interest? It really depends on what type of loan you take out but the important thing to know is that you will have to pay interest. For example, if you took out a $20,000 loan at 5% interest you would end up paying $21,000 total. That's just a simple example but that's how it basically works.
Also, you always want to keep in mind that loans for college also have deadlines. That means that you will be given a payment plan that you need to keep up with. Not paying at all can really affect your credit and this is not good. It can affect your future later on when you try and buy a car or a house. You could end up paying more because of bad credit. Check out my loan consolidation page for help.
When looking for educational loans you have a great amount of options. The first of your options are federal student loans. The low interest rates make them the best loan choice. When getting loans from the federal government you will have some major benefits that don't come with private loans. You will have fixed interest rates. That just means that your interest stays at a certain percent without changing or going up.
You will also realize that the federal student loans are offered in subsidized or unsubsidized form. I'll explain. Subsidized just means that the government will pay interest on your loan until you get out of school. So basically the government will extend you help. On the other hand an unsubsidized loan has no such benefit. Instead, you start paying interest on your loan as soon as you start school.Then we have private student loans. This type of loan is typically harder to deal with because you have total responsibility and no help from the government. The only reason you might need one is because your financial aid from all the other sources wasn't enough. Do not be so quick to get this type of loan considering you will have to pay higher interest most of the time. As a matter of fact don't get loans for college if you don't have to.
First of all, most students are graduating from college with huge amounts of debt. The typical person graduates with $20,000 in debt and that my friend is not something I would want to have. Another reason to use loans for college as a last option is too much is at stake regarding your financial future. If I were you I would work and continue to work hard to win as much scholarhsip money as possible.
Did you know that if default on your loan you won't be able to get your title or degree? Also, you wil end up getting your wages garnished until the debt is paid off. That just means that a portion of your check when working will be deducted to pay off your debt! That's why I am against taking out loans for college if it is completely unnecessary. Learn more about loans for college.
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