Managing Student Loans

Student loans are absolutely crucial for most people who want to acquire a college education today as the costs are prohibitively high. As more people are encouraged to continue with their education and obtain a college degree the extension of student loans has made college accessible to many who would never otherwise have had an opportunity to attend.

Federal student loans are available to all who qualify, meaning that those from poor income backgrounds, and single parents already struggling to juggle work and a family, are able to achieve their dream of a degree. The level of borrowing necessary can be off putting in itself as the student is taking on a level of debt which may well take many years to repay after graduation, and should not be taken lightly. For those without family support to help out with college finances it is a massive responsibility to take on student loans, especially at such a young age, with the inherent worries about being able to afford to repay them after graduation.

Even if students are able to obtain scholarships and grants they may still require further assistance in the form of loans, as there is often accommodation and text books to pay for on top of the heavy tuition fees. Every student who requires a loan must first apply through the FAFSA before applying for private loans, as all loans must be ultimately allocated through the college financial officers. When a student obtains a loan most of it is siphoned off to cover college tuition fees and the student isn’t handled the full sum to decide what to do with.

A large number of students will qualify for a government loan, either subsidised or unsubsidised, which means they are eligible for lower fixed interest rates than private loans offer. Some federal loans also have deferred interest so that students with no other means of finance are able to delay any repayments until after graduation. Federal student loans are granted without credit checks whilst private student loans are reliant upon them. Thus the latter almost always require a co-signer to stand guarantor for the student as not many have had the chance to establish their own credit history.  

Private loans which are generally used to make up any shortfall, are more costly to service than federal loans, and are usually subject to the vagaries of the variable interest rate making it difficult to determine what the final cost of the loans will be. In most instances the student is expected to repay the interest on the loans whilst at college, and just defer the principal until after graduation.

Considering the high level of debt which college loans invariably bring means that is has never been more important for the potential undergraduate to contemplate very seriously if a degree is something they want. Having a degree brings enhanced earnings potential with it but it means many years of debt to manage, and all should be aware that student debt is not dischargeable, even with bankruptcy. College loans should not be taken on lightly, as although they will buy you an education it is at an expensive price, but worth it for many in the long term.