Ten years ago I received a piece of Bazooka Bubble Gum in the mail with a note from my student loan lender requesting payment saying “don’t blow it!” At the time I was extremely annoyed, but looking back, I see it was a creative tactic that left a lasting impression and really got my attention.
I struggled so long with those student loans, but I’m finally free. Now I have a sister in college, a brother soon to graduate from college, and another brother preparing to enter college next year.
It seems fittingly appropriate to spend some time on the subject of student loans. When I was in college my parents were not knowledgeable about financial aid and student loans. Needless to say I was unaware of my options. The Internet was not what it is today. My resources were limited. Living Life Abundantly includes living debt free and/or managing debt responsibly. I hope this series helps others through the student loan maze.
Things To Consider When Taking Out A Student Loan
Financial Aid isn’t what it use to be… Most students not fortunate enough to obtain scholarships depend heavily on the help of student loans.
According to studies, student loans make up 54 percent of the total financial aid awarded every year. Consequently, with the rise in student loans, there has also been a rise in defaulted student loans.
The Project on Student Debt research indicates that recent graduates left college with an average of $19,646 in student loan debt.
It’s no wonder student loan debt is a fast growing problem for most student borrowers. With this in mind, it is important to consider practical solutions to borrowing student loans responsibly.
Do Due Diligence Before You Borrow
Due Diligence = The process of investigation
Take the time to thoroughly check out all student loan options. Many borrowers sign on the dotted line without even understanding the terms of the loan or their obligations. Do not make the mistake of rushing through the student loan process. By doing your homework you will save yourself some money and perhaps even preserve your credit history in the long run.
Avoid The Loan Trap
Many students eagerly borrow the maximum amount falling into what is known as the “loan trap”. It is very similar to what we’re seeing with the housing crisis, where some people borrowed more than they needed or more than they could afford to repay. Be responsible. Keep the bigger picture in mind and avoid the loan trap. Only borrow what you need!
Before Applying For A Student Loan Determine How Much Money You Actually Need
This should be a no-brainer, but unfortunately it is a step many students skip. How much is your tuition and books? How much money will your family contribute to your education (if any)? How much money will you receive in grants or scholarships? How much money will you personally contribute from your job (savings)? These questions should help you figure out the amount you’ll need to make up any shortages. Again, only borrow what you need.
Take Proactive Steps To Reduce Your Loan As Much As Possible
The less money you spend, the more money you have access to, the less you’ll have to borrow to pay for your education. Strive for excellence while in school. Your grade point average may not seem like a big deal but it can certainly help you qualify for scholarships. As a student, your first priority should be your school work. It pays to get A’s! If and when possible, get a job during school breaks. If you can handle working during the school year, by all means work! Even in this economy, there are still some flexible job opportunities for students. If you can’t find a job start a blog, freelance, tutor, offer your services.
Be creative and proactive in finding ways to reduce your student loans. Many students are starting online college funds to cover their educational expenses through sites such as SchoolRaise.
Find Student Loans With The Best Terms
Don’t just settle for any student loan, find the loan that meets your needs and offers you the best possible terms. You want the lowest possible interest rate.
Look into:
1. Federal Perkins Loans
2. Federal Subsidized Stafford or Direct Loans
3. Federal Unsubsidized Stafford or Direct Loans
4. Alternative or Private Loans
There are special loans that are comparable to the Perkins or Subsidized Stafford or Direct Loans. For information on these types of loans check the College Board’s online search. There are also education loans for parents.
Parent Loans
1. Federal PLUS Loans
2. Private Loans or Alternative Loans You should also check with your school’s financial aid office to see if your school offers its own loan program.
How Much Should You Borrow?
As previously mentioned, only borrow what you need. I can’t stress this point enough. I know you’ve probably heard of students getting those financial aid refund checks and having extra money… That money comes with a price tag… if it came from a loan its got to be paid back.
Consider Options That Will Reduce Your Loans
Ever hear of student loan forgiveness? There are some programs that will forgive student loans if the borrower meets certain criteria. Some student loan forgiveness programs require borrowers to do volunteer work, military service, teach or practice medicine in certain communities. Check with your financial aid office or lenders for more information.
Estimate Your Loan Payments
Obviously, the more you borrow, the higher is the your monthly student loan repayments will be once upon completing school. Calculate your monthly payments based on the estimated starting salary of your chosen field. This will give you an idea of what you’ll need to budget and how much money you’ll need to make.
The Essential Borrowing Tips
1. Start by looking at your financial aid award letter to figure out which need-based loans you qualify for including the amounts.
2. Consider the amount that you actually need to borrow.
3. The rule is: never borrow more than you need. Remember, as a student loan borrower, you are not required to take the full amount of the loan you are offered.
4. While working a job may seem like an extra burden, so is struggling with high loan repayments after college. Get a job!
5. Be sure to follow the loan application instructions carefully. Make sure you have the most recent application form, as any errors will delay the receipt of your funds.
6. When applying for a Stafford or Direct student loan, be prepared for the amount that is paid to the college to be less than the amount you signed for. Usually, a fee of up to four percent will be deducted from the student loan. This deduction occurs before the check is sent to your college.
7. Keep track of what your monthly student loan repayment amount will be after you graduate from college.
8. If extenuating circumstances occur that and you find yourself self in need of more than the amount offered in your financial aid award letter, contact a financial aid counselor at your school before taking on an additional loan.
9. If you take an additional or an unsubsidized loan, make interest payments while attending school to save money.
10. Be responsible.
Don’t Blow It!
As it said, the most important thing is to start by looking at your financial aid award letter .I found some relevant inforamtion at Loans for poor credit people.In any case, I think one should consider very carefully before taking any loan.
As it said, you don’t just settle for any student loan. It is also true that you should find what feet for your need. I found some relevant inforamtion at
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In any case, I think one should consider very carefully before taking any loan.
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Happy holidays
To my mind the tehth point of tips list – the most important. Be responsible for thing you do. And do this always.
"Take Proactive Steps To Reduce Your Loan As Much As Possible" – very important. The less you need to borrow, the better and easier it is for you.
This is a great post. I am sure a lot of aspring college students will find this very helpful. I also like the last line when you said that people should be responsible. It is the only way that people should live. Students will now be aware what it is really like because of your post.
Nice article. It's nice to know that there are ways a student can continue their studies. But be guided and bear in mind your responsibilities or obligation after graduating. thanks for the post. very informative.
The problem with student loans is that is seems like paying them back is so far away when you take them out. Plus, all your professors pump you up full of confidence, as if you will be making a fortune when you graduate. Sigh, I'm doing my best to get this out of the way so I can move on with my life!
hi, I wish I had read this article last year
. anyway, I think the most important thing is to start by looking at your financial aid award letter .I found some relevant information at Human Resources Recruiting .In any case, I think one should consider very carefully before taking any loan.
I am sure a lot of aspiring college students will find this very helpful. It will lower the burden of your parents in many ways.. You feel as you stand at your own feet!!
Informative post
I think that with this current recession and the turmoil of the economy that it is important for students to choose wisely the kind of loan they are getting.
It is good reference and helpful. Finding student loans is a very tedious process, not to adjust that the loan must suit with students needs and his/her financial status.
Great post! Education is very important but unfortunately, it comes with an expensive price tag. Good thing student loans are readily available to help breeze through college without having the pressure of coming up with the money needed as enrollment time comes.
It's unfortunate how things are structured in this country. You need to bankrupt yourself in order to get the education necessary to succeed. My cousins live up in Montreal, Canada, where university is heavily subsidized. As a result, they're able to pay off their student debts with summer jobs.
I agree people should always exhaust all federal options before they ever touch a private student loan. They should also really look at their choice of school and major. If you decide to major in art history that 40k dollar a year private school in Iowa might not be your best choice of schools. Find the school and major that will allow you to live after school, don't lose your life to student loans.
a careful and considered borrowing plan is the key to ensuring manageable repayment of student loans – work out how you plan to pay it back maybe look into getting a Part Time Job to help kick strat the repayment proccess.