Summer is coming to a close and for college students, that means it’s time to head back to school (or start school for you freshmen out there.) Everyone knows college is expensive, and the price only seems to be increasing every year. In fact, the average 2015 graduate with student-loan debt will have to pay upwards of $35,000 making them the most indebted class ever.
Student loans go hand and hand with your personal finances and credit report. One of the critical factors which is considered by financial institutions before they had out a loan to any borrower, is their credit report. And having bad credit can reject any person’s application. This is one of the main reasons why many personal financial institutions have begun to offer a loan for veteran even if they have bad credit. When you or your kids apply for student loans, make sure they’re taking the right steps to applying for student loans to avoid crippling debt come post-graduation. If you have already graduated and are struggling with your student loans, check out our blog post: Game of Loans – A Guide to Defeating Student Loan Interest.
Step 1: Apply For Scholarships
There are millions of scholarships out there just waiting to be awarded to students like you (assuming you are a student.) There’s just about a scholarship for everything, whether you’re artistic, intelligent, athletic or speak Klingon (yes you read that right, there IS a scholarship based on the Star Trek language.)
Find out if you are eligible for a scholarship that’s right for you. Use this free search from Discover.
Step 2: Compare Financial Aid Offers
I’m sure the financial aid offers will be rolling in. Make sure you read the fine print and compare all of the financial aid packages you may receive. It’s always good to have options, so choose the offer that you believe is the best fit for your situation.
Step 3: Plan a Budget
Having a good budget in mind will help when determining how much you need to borrow. Always take into consideration the college cost, your cost of living, your contribution, financial aid & scholarships. Crunch the numbers and see how large of a loan you’ll need.
Step 4: Only Borrow What You Need
Just because Sallie Mae is offering you more than you expected doesn’t mean you have to accept it. Only borrow what you need based upon the budget you came up with in step 3. Doing so will mean less money to pay off after you graduate and also less money you’ll be paying in interest.
Step 5: Talk with Your Financial Aid Officer
Your financial aid officer is there to help you. If you see something you don’t understand, ask questions and ask for their advice. If you think you may need to borrow more, you might want to look into Private Loans. Just so you know, if you are planning to take out private loans you will need a cosigner with good credit.
Step 6: Know your Loans Before you Sign
You’re finally ready to sign for your student loans! Make sure your know everything about them before doing so. Read the fine print. Know specifics like: How much is the total amount of the loan? Can you get a lower interest rate? What will the monthly payments be? How long before you will have to start paying? Are any fees involved?
Ask your student loan officer if you have any questions and make sure you know your loan through and through before signing away.
Step 7: Get a Part-Time Job
Securing a part-time job while away at school can help you cover your living expenses, giving you more money to put towards the loan. You may even want to consider a work-study program at your college.
Step 8: Start Making Payments While in College
Just because your payments don’t start until after you graduate, doesn’t mean you have to wait to pay. You’d be surprised how big of a chunk you can take out of your loans within the 4 years you are in school. You don’t have to pay a ton of money either. Pay what excess money you can afford, every bit counts!