3 Tips For Understanding the Student Loan Process
June 30th, 2014 by Jennifer Frankel
While student loans can seem confusing and complicated, never fear! As long as you’re armed with the right documents and information, you’ll be more than prepared to take on the task of applying for and choosing the right student loans for you.
Here are our top 3 tips for understanding the student loan process.
1. Don’t Borrow More Money Than You Have To
If you can work during the school year, work. If you can stay at home and commute, stay at home and commute. Consider all your options, because you can always take smaller loans if you’re willing to make some compromises. Try and think of it as helping out your future self. (We promise you’ll end up thanking your past self!)
2. Brush Up On Loan Lingo
There is a lot of fine print in the pages that you will have to sign before receiving your funding, so ensure you know at least the basic terminology so you can thoroughly understand the documents. Loans can be very helpful, especially when goes towards something as important as furthering your education, but they can also be a great cause of stress and worry if you aren’t prepared. We’ll give you a couple of words to get you started:
- Default: If you don’t make multiple loan payments on time and/or you break one or more terms of your legal agreement with the given lending institution, you will default. Potential consequences include the lowering of your credit score and dealing with collection agencies.
- Forbearance: If you are not eligible for loan deferment, you may be eligible for forbearance – a temporary reduction or postponement of your loan payments, due to illness, medical residency or internship and more.
3. Pay Attention To Interest Rates
Interest rates can be fixed or variable, meaning they’ll either stay the same for the entire duration of the loan (fixed) or they won’t (variable). Each type of loan has a different type of interest rate, so you must choose wisely when weighing your student loan options. A high interest rate may come back to haunt you post-college.
Remember, the more educated you are on the subject of student loans, the simpler the process will be. Check out these FAQ’s to help you understand the process further.