The Benefits of Low Interest Student Loans

2007-03-08 10:33:40

( Financial )



Low interest student loans can be a big help to you if you are thinking of going to college, graduate school or a continuing education institution. Low interest student loans have the main benefit of giving you the means to finance your education now and thereby increase your income earning potential, then pay for what you owe in installments.

Tuition fees and other school expenses like your room and board, books and living allowance can be a heavy burden. Thus, you may not be able to afford going to college or getting more specific training. However, you also know that having a college degree gives you an edge over other people who don’t when you are competing for a job. In the same way, a master’s degree or specialized training can increase your desirability in the job market.

With low interest student loans you can borrow money for your educational needs now then just pay the bulk of your loans when you have the capacity to do so. Meanwhile, you can work to keep up with the monthly payments that you need to make. If you are really lucky, you will get one of those subsidized student loans that the government offers to financially needy students. In such low interest student loans, the government pays for the interest while you’re in school and for a fixed period of time afterwards. You will begin repayment only after that grace period has elapsed.

You also have the alternative of taking out interest only loans or interest only financing like the interest only mortgage loan to finance your education. In these kinds of loans, you have considerably lower monthly payments than standard loans because you are only paying for the interest. Interest only loans usually give you around five years of interest only payments. However after the grace period, you will have to begin paying on the interest plus the principal. You can therefore expect a significant jump in your monthly dues.

For students like you, interest only financing can be quite ideal. The money that you save every month while in the grace period can be used to pay for your books and other incidental expenses. And when the grace period ends, you can be settled in an adequately paid job to meet the increase in payments.

Of course, this scenario can also backfire on you if you take a long time finishing school. If your income level has not sufficiently risen by the time your interest only loans monthly payments increase, you may default on your loans and bury yourself in greater debt. For students, the low interest student loans may still be the safest option.


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