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Are Student Loans Right for You?
The government gives out student loans every year to thousands of college and graduate students. These loans are used to financially assist students while gaining an education. For recent high-school graduates, obtaining student loans can be necessary for a college education because the student and their family are not able to pay the full tuition. The cost of tuition varies depending on the school. If you’re working toward your degree in a community college, tuition may be lower, allowing you to contribute some of your own money toward your education. State universities are less expensive than private schools, however the tuition is still more than many families can afford. Those who are attending graduate school or pursuing a doctorate are also likely to be in need of student loans.
Who Qualifies for Them?
There are guidelines to find out if you qualify for a particular student loan. For undergraduate students, the government automatically provides a loan to college-bound individuals. After the age of twenty-four, this loan is based off of the student’s income. Any younger and the loan is based off of the parent’s income. Often, this type of student loan goes mainly toward tuition, and leaves some money left over for payment of rent, utilities, groceries, and textbooks. For graduate or post-graduate students, loans are usually based off of previous academic performance or accomplishments. If you do well in college and apply to a prestigious graduate school, your loan’s interest rate could be lower because of your achievements.
Knowing Which Loan is Right For You
Depending on your academic success, your income or a parent’s income, you will naturally be guided toward the loan that suits you best. Banks also offer loans, which are different than government loans. When you get a student loan from a bank, you are expected to pay back the full amount plus interest. These interest rates can often be high, so it’s important to review which bank has the right loan for you. Government loans also require payment of interest, but these are often much lower. Taking on a student loan can be a big undertaking because tuition is gradually increasing in many schools. Be sure you know where you plan on attending school, then research which loan is right for you.
Paying Back Your Student Loans
After finishing college, you are given six months until your first payment on your student loan is due. Don’t be scared off by the large figure you owe—you’ll have decades to pay it off. If you find yourself without income after the sixth-month grace period, you can defer your loans. This is when you push back your payment due date by six months to one year. After the year is over, you will receive a letter from your lender along with a bill. Even if you are unable to make payments after you’ve deferred once, you can defer again. Be aware that for every year you defer, the interest on your student loan piles up. Although you may think you can keep deferring your student loans year after year, you do need to consider securing a steady income to avoid paying high interest rates.