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What to Consider when Applying for Student Loans
Applying for student loans can be a disconcerting process. It’s very easy to get access to money, even with compromised credit; however, you’ll often pay higher interest rates, which can make it more difficult to manage your debt and pay those loans back over time.
When it comes to applying for student loans, take your time and know your options. It’s important to find reputable lenders with reasonable terms.
- Borrow only what you must. Student loans are one of the few debt categories not wiped away in bankruptcy, so it’s essential to borrow only what you can afford to repay.
- Choose reputable lenders. Avoid private loans, which tend to have less oversight and higher interest rates. If you choose to go back to school, you may not have to pay on government loans during that period, but private lenders do not adhere to the same policy.
- Shop around. Find the lowest interest rate and best repayment terms. Taking out a loan enters you into a relationship with the bank or lending company that can last for years or even decades. Be sure you’re signing a contract you can live with.
- Understand capitalization. If you cannot pay your loans and ask for deferment or forbearance on a loan, the debt may continue to accrue interest during the deferment or forbearance period. If that interest isn’t paid immediately, it is capitalized at the end of the period, meaning that it is added to the principal loan balance. All further interest is then figured based on the total principal balance. Capitalization can increase your total loan balance by thousands of dollars over the initial amount borrowed.
- Plan and budget for repayment. Even before you take the loan, know what your total monthly payments will be on all existing loans and have a plan in place to pay for them. Save what you can now, so that you can continue to pay your bills if there are unexpected stresses on your finances down the line.
Manage Your Credit with CreditGuard
At CreditGuard, we help you to minimize your overall debt by negotiating with creditors on your behalf to reduce credit card payments and interest rates – even to waive late fees. With the right debt management program, you can pay off your credit cards in less than five years, rather than struggling with high interest rates for 30 years or more.
We also offer credit counseling services to help you get a handle on your credit card debt and student debt for good. Don’t just pay down your current debts – learn how to manage your money and your credit, budget effectively and keep bills from spiraling out of control.
For more information on student loans, also see: