Things To Watch Out For Your Student Loan
Getting into a college program is not an easy thing to do. Although a college degree is your ticket to a future career and financial stability, it nonetheless comes with a price tag. And that price tag is not too easy to pay off especially if you don’t come from a rich or well to do family. Financial capacity comes into play with all the requirements and pre-qualification examinations that you have to undergo through.
Once you are able to get into a particular college, the next thing that you should think about is how to pay for all the educational expenses as a college or university student. If you came from a well-to-do or rich family, this won’t be a problem, since you can always turn into your parents for financial support. If you are luckier, your parents might have even saved a good amount of money to send you to college. But then, not every college students are born lucky. Majority of the students still belongs to the middle-income families who could barely send their kids to college.
Fortunately, there are various student loans that you can avail of, either through Government funds or private funding. Government sponsored student loans are easier to pay and with lesser interest rate as compared to private student loan facilities. Thus it is always a must to try applying for a Government student loan first before applying for a private student loan.
Here are 4 things to watch out for when applying for a student loan and financing your way into college education via student loans.
For government sponsored student loan, interest rates usually are at affordable rate. Since it is the government’s mandate to provide better educational access to its constituents, it is expected that student loans from the government are made available to help students and not to profit from them. However, this does not mean that you should not pay particular attention to interest rates charged to students. Although government loan facility has more leeway in terms of charging loan interest, you should make sure that you can pay that interest on agreed time so as not to accumulate over due charges which can further shoot up your educational expenses.
The same is true and more important when availing of private student loans. Examine whether the interest charged on your loan is not too high as compared to government student loans. You must also check the payment terms for the said interest.
Student loans do not come without a price for private funded student loans. For this type of loans, a disbursement fee of 3% of the amount issued to borrower is usually charged. This covers for the processing and other government fees that the lending institution must settle when issuing student loans. The good news is that for government funded student loans, this disbursement fee is not charged.
Annual loan limits
Annual loan limits for private and government student loans varies and depends on the expenses for the chosen college program of the students applying for a student loan. Some private lending institutions offer full cost proceeds that cover all the educational costs of the students. Some government and private lending institutions put a fixed amount to release to a student per school year or per school term. Others give a lifetime limit that could go as high as $130,000.00. Students applying for a loan must carefully examine these loan limits and plan their borrowing strategy to make sure that the whole term of their college education is fully covered by the loan limits of the lending institutions.
The last thing to watch out for you student loan and the most important of all things is the repayment period for your loan. Lending institutions have different repayment terms. The most common among these lending institutions is repayment after graduation. Payment of the loan plus the interest is deferred while you are still in school. While others require repayment of the interest immediately while you are in school. You have to make sure that you can settle these repayment obligations on time before availing of any student loans to avoid additional penalty charges.