Students are often burdened with the responsibility of paying for their education. One way students handle this is by taking out a student loan. There are several kinds of student loans out there, with different interest rates and repayment plans.
To ensure you're getting the best deal possible when it comes to your student loan, it's important to understand what these terms mean. That way, you know exactly what you're getting yourself into before signing on the dotted line. So, consider getting the knowledge you need at creditninja.com, which has the resource to guide you per state requirements.
It's a well-known fact that student loan debt is a big problem for Americans. It doesn't matter if the loan was for an undergraduate or a graduate degree, paying it off with a less-than-average salary is a nightmare. But there are ways you can make repayment easier. We will explore those points later. First, let’s find out what a student loan is and who's eligible for it?
A student loan is borrowed money from a private bank, a federal government or any other financial institution to pay for your education. It is specially designed for students to pay for their tuition fees and other associated expenses like books, supplies, accommodation, etc. However, grants and scholarships are completely different, and don't fall into the student loan category.
The eligibility criteria for student loan is anything but strict. In fact, everyone can qualify for a student loan. It doesn't matter if you depend on your parents or not. Once your dependency status is established, the next thing is to gather relevant documents and financial information, which includes tax returns, bank statements, and information on your financial assets. These details are available on creditninja for your convenience.
In the United States, every new government comes with a renewed focus on student loans. Why is it so hard to pay off student loans? Why are students starting to refrain from this facility? The answers are clear:
● Student loans are expensive. If you are in debt, you need to pay the principal amount and the interest rate, which can vary from 4 to 7% for federal loans and 11 to 15% for private bank loans. It's definitely an expensive option, even if we compare it with a credit card. If you desperately need a student loan, then a federal loan is your best bet, in terms of interest rate.
● Relying on a student loan means you'll start your professional career in debt. This is not an ideal situation, but thousands of students face this problem and have to struggle for the first few years of their careers. Also, it brings with it undue pressure to earn a lot of money at the start of one's professional life.
● Another drawback of a student loan is that you often have to put off other goals to pay it off. The average student loan monthly payment is between $350 and $400. If you intend to pay off the loan faster, that amount increases significantly. For a graduate, hundreds of dollars is a lot of money that could have gone into a car or house payment and purchase of other financial assets. This proves that paying off a student loan requires the sacrifice of some life goals.
● It's almost impossible to get rid of a student loan, even if you cannot pay. Declaring bankruptcy can save you from repayments of mortgage, bills or other loans. But with student loans, that doesn't work. You may, however, apply for discharge and forgiveness, which may allow you not to pay back the loan.
● Student loan repayment can affect your credit score. A good repayment history can improve your credit score. Similarly, defaulting on repayments can adversely affect your credit score for life.
Student loans may seem like a burden and students and contribute to student debt. But they provide students with the chance to afford education and build a career. Your decision whether you might need a student loan based on your individual circumstances.