Student Loan

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.

1. 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.

2. 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.

3. 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.

4. 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.

If you’re a current college student or a recent graduate, you probably have one financial topic constantly looming over you: debt. The majority of students who go to college end up taking out some sort of loan to pay for their education and other expenses that come along with getting that education. And while you likely didn’t have to think too much about these funds while getting your education, once you’re out in the workforce, you’ll soon realize the exact impact that those debts can have on your life. So to help you survive this financial hardship, here are three tips for managing debt incurred as a college student.

Be Realistic About The Amount of Debt You Have

When you’re in the middle of getting your education, there’s a lot on your mind that takes priority over how much debt you have. It’s easy to take out your student loan, use that money, and then forget exactly how much you were dispersed and what the plan is for paying it back. But as soon as the repayment period starts, you have to get your head out of the sand and get a clear picture of your financial situation. Lita Epstein, a contributor to Investopedia.com, shares that the first thing you should do is add up all your debt: every student loan, everything on credit cards, and any personal loans you have to pay back. Only once you know the total amount you owe can you create a plan for repayment.

Try To Negotiate Your Debts

After you’ve totaled up the amounts you owe, you might find that the amount just doesn’t seem possible for you to pay back. If you find yourself in this situation, Allison Martin, a contributor to MoneyTalksNews.com, suggests talking to your lenders about possible negotiations. You may qualify for debt consolidation or be able to reduce your interest rates or extend your grace periods until you are more financially secure. You don’t have to wait until you can’t make your payment to try your hand at negotiations. Once you begin to feel worried about your debt, ask about negotiation options.

Pay As Much As You Can When You Can

In your life, you may find that there are some months where you can afford to pay a little more on your loans that just the minimum payment. If this is possible for you, TICAS.org recommends paying as much as you can on your debts when you can. By doing this, you’ll end up paying less in the long run because you’ll pay down the principal of the loan faster, which means you’ll end up paying less interest each time you pay more than the minimum payment. This is one simple way to get out of debt quicker than the terms of the loan may call for.

You can overcome the debt you incurred during college. Use the tips mentioned above to help show you how.

College students are prime targets of predatory lenders, from credit card companies that want to drag you down with high interest rates to student loan providers who aren’t all that interested in supporting your education. With so many people after your money, how can you keep your credit intact long enough to graduate?

The key to credit management success during your college years lies in research, caution, and dedication. It’s important to build your credit during this time, but you can’t just take out loans and credit cards willy-nilly. Instead, try these 3 strategies to protect yourself while developing an upstanding credit history.

Be On Time

More than many other types of loan or credit, missing a student loan payment can have dire credit results. Did you have good credit before? Well, a single missed student loan payment can result in a 100-point credit score drop. That could have serious implications for your ability to get other types of loans after college, such as a home loan or a low-interest credit card.

Drive Carefully

Many college students consider having a car an absolute necessity, even if strictly speaking they could do without one. Over-eagerness to own a car can lead students to invest in something flashy rather than opting for a used car or sharing a car with a friend. This isn’t a good choice.

On the other hand, if you have bad credit that you’d like to improve, investing in a used car can be a great way to improve your credit. If you can pair a hefty down payment with a short-term auto loan, you can repair some of those older credit problems. The key is that you already have to have some money at the ready. Still, it’s often easier to get a car loan than a decent credit card, and you’ll do less damage with it.

Choose Roommates Wisely

Are you ready to get off campus? Renting an apartment is a great way to develop more independence and not living in the dorms can be an ideal way to save money, especially if you have a roommate. The trick is, you need to choose your roommates wisely. If you choose a roommate who doesn’t keep up with their share of the rent, your credit report will reflect their transgressions. Your creditors aren’t interested in hearing that it was your junior year roommate who’s responsible for that dip in your credit score. As far as they’re concerned, choosing a financially irresponsible roommate is your problem, not theirs.

Nobody likes it, but the fact is that establishing good credit is all about being cautious, reading the fine print, and maintaining a conservative estimate of what you can handle. It’s always tempting to accept that larger line of credit or that slightly nicer apartment, but you want to keep your spending under control. The more consistent you are in your borrowing and spending now, the better your financial future.

Unless you were born with a silver spoon in your mouth and you are one of the lucky few that will have college paid for them, you are probably going to have to take out student loans.  Taking out student loans is very common and unfortunately so are many mistakes that college students make when taking out these loans.  If you want to be smart when taking out student loans for college, here are 4 mistakes to avoid when you taking out your loans.

Taking Out More On Loans Than You Actually Have To

One of the biggest mistakes college students make when taking out loans is taking out too much.  As a poor college student, it can be tempting to take out a larger amount of loans to help pay for a new computer, books, or even basic necessities like groceries.  Just remember that every penny you take out on student loans has to be repaid eventually with interest.  Before taking out a student loan make sure to do the math and only take out student loans to help pay for tuition and books.

Deferring Student Loans

Deferment is probably the costliest mistake college students make on their student loans.  Deferment is a nice option if you have a difficult time finding employment after school or have some unforeseen circumstance that can financially drain you.  However, many students choose to defer their loans because they can, not realizing that their student loans are adding up with interest.  If you can afford to make even just the minimum payment on your student loans once you are out of college, do it.

Not Setting Up Automatic Payments

It can be easy to miss a student loan payment with how busy life can be. Setting up automatic bill payments for your student loans is a smart move because it will not only ensure that your payment will be made but also that paying on time will help your credit score which will be important in the future when you purchase a vehicle or buy a home.

Not Taking The Time To Assess Refinancing Options

When you are in school you are just thinking about the next test that you have to pass and not thinking about the years of student loan payments that are in front of you.  Look at the interest rate that you have on your loans and determine if consolidating or refinancing that student loan debt makes sense for your financial future.

College is an exciting time but also a crucial one in creating the building blocks for your future.  When taking out student loans, make sure that you make smart decisions and avoid these mistakes.