If you’re like more than 44 million Americans, you’ll have to take out student loans to get through college. It’s the less glamorous part of attending college, but it’s a necessary step nonetheless. Some loans, you’ll automatically qualify for through your educational institution while you’ll have to apply specifically through others for your private bank.
Your student loan will likely be the first loan you’ve ever applied for, which means the entire process is brand new. As you look at loan options, here are some things you need to know about applying.
- Your Credit Plays a Factor
Private student loans can be difficult to get, mostly because many college students have little or no credit history. Your credit history if based off of things like previous loans, credit card debt, ability to pay debts on time, and similar. It can be hard to qualify for a loan with a good interest rate if you have no credit.
It’s even more difficult if your credit score is poor based on past behaviors. It’s important to work on fixing your credit score to put you in line for a better loan.
- Aim for Government Subsidized Loans
If you qualify, a government subsidized loan is by far the best option. It’s extremely easy to accept, and the repayment terms are much better than a traditional loan. You’ll have lower interest rates that don’t kick in until after you graduate college. You also won’t have to make any payments while in school. Ask your school’s financial aid office if you qualify.
- Be Organized When Submitting Your Loan Application
When applying for a loan, you’ll probably sit down with a loan officer who will look over your credit and discuss your options. The more organized you are for the meeting, the more likely you are to be approved.
You can find a list of any loans or balances you might owe on your credit report. You’ll present this list to a loan officer, which will help you get things in order for taking out a new loan. It will also show you past account balances that you may need to settle before you can qualify for a new loan.
You should also bring photo identification, proof of enrollment, and federal financial aid documents (FAFSA), and any other financial documents that might be helpful in the process.
- Note the Interest Rates
All loans are not created equally. The repayment terms and interest rates may differ, which will affect your ability to repay the money. Before accepting a loan, carefully evaluate the interest rates. If it seems higher than the national average, look into other options to try to bring it down. You may be able to find a better loan through a private or online lender rather than through the school or a big bank.
If you’re prepared for college loans, you’ll come out on top. Financials are complicated, but understanding them will bring you peace of mind and help you repay debt faster after graduation.