4 Tips for Picking a Student LoanDecember 11, 2017 9:00 am
Are you starting school and nervous about making it work financially? There are about 48 million Americans who hold $1.75 trillion in student loan debt in the United States. Taking on responsible debt and repaying it wisely is all about preparation, and we’ve gathered tips and tricks from experts to find the best loan for your education.
The first step to knowing what you need in a student loan is getting organized. Figure out the costs of your education, projected earnings, and future salary. Here’s how:
- Use this CNN calculator to price out how much tuition, fees, and room and board will approximately cost. You should also build in transportation costs, fun activities such as sporting events and concerts, and an extra cash cushion just in case.
- If you are planning on working while going to school, you should calculate your projected earnings by multiplying the number of working hours with the campus minimum wage.
- You can use Glassdoor to calculate a future salary to plan how you’ll pay back your student loan. Financial experts suggest you should not take on more student debt than your first year’s expected salary.
Look for Free Money
Before you take out a student loan, you should exhaust all scholarship and grant options. There are thousands of scholarships out there depending on interests, race, gender, special skills, and accomplishments. You can search for different organizations, and many credit unions and even corporations offer scholarships (although, be careful to avoid scholarship scams). After you’ve heard back from every scholarship, you are ready to decide on a loan amount.
Research Different Options
Looking through student loan materials can be confusing. Get up to speed on financial vocabulary with this online resource from the Institute for College Access and Success. Forbes suggests choosing federal student loans before private student loans. You should fill out the Free Application for Federal Student Aid (FAFSA) form to identify the federal grants and loans you qualify for. Many universities require this form for in-house financial aid as well. Once you’ve exhausted federal loan resources, look into private loans.
Make sure you shop around for private loans, as the one with the advertised lowest rate may not be your best option. You should also consider repayment options — you’ll want to look for a loan that starts repayment at least six months after graduation to give yourself time to find a job and settle in.
Your local credit union is also a good source for a student loan. Credit unions tend to be more flexible and supportive of local students, as the money is directly impacting their members and the communities. Since credit unions are not-for-profit organizations, they often offer lower interest rates and charge fewer fees.
Montana students are potentially eligible to receive a savings match of $1,500 or more from the MESA program, and the updated G.I. Bill may give you the opportunity to receive educational benefits in exchange for military service. This is helpful to those who wish to become pilots, medical professionals, or technology specialists.
Don’t Sweat It
Don’t let the financial burden stop you from enjoying your accomplishment! You’ve been accepted into a great school, and you should enjoy it. Try to a get part-time job and work summers to pay off your loan—but don’t get too distracted from your course work. Good grades earn you more scholarships in the future.
The financial side of education can be stressful. Remember to enjoy the process and check out our money management tips for recent graduates when you’re ready to pay off your student loan.
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