College loans 101: What You Need To Know Before Getting One

2007-03-08 10:33:40

( Financial )



College education is costly. Admittedly, not every one can afford it. Private college loans are the best way for students to get good education even with a limited budget. Due to affordable interest rates, many collage students are able to make ends meet by availing of college loans.

Know your limits
Remember the rule of borrowing: whichever amount you borrowed, you must repay it with interest. This makes loans, particularly college loans, difficult to take on.

In order to pay off your debt quickly, know first how much you really need and can afford. Otherwise, you could be splurging on a bloated budget only to end up paying for your college expenses 10 years after you have spent them.

To know how much is too much, estimate the amount you can repay upon graduation. This involves estimating your future salary and expenses by using budgeting calculators available on websites of major lenders. These calculators let you estimate expenses on rent, utilities, food, clothes, insurance, etc. By subtracting your estimated expenses from your estimated salary, you can easily predict how much you can afford to go to monthly private college loans payments.

No to default
If you happen to borrow more than you can afford, you run the risk of defaulting, which means failing to pay back your loan according to terms and conditions agreed upon.

Default usually occurs after you miss payments for six months. This badly affects your credit history, which may result into denied mortgage, car loan, credit card, or personal loan, or higher interest rate.

To prevent this, immediately discuss with your private college loan lender possible ways to work around your condition should you encounter problems repaying.

Remember that more education leads to higher salaries. Do not allow present financial shortage to prevent you from earning a degree. Avail of college loans. Armed with the right information, you can be assured of positive long term financial standing.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.