Want to know the most important things about student loans before you enroll in school this fall? Here are three things about student loans that you shouldn’t ignore.
Are student loans making you rethink your decision to go to college? Going to college is exciting, but paying for college can be a pain. If you don’t have family willing to pay for your education, you may find yourself taking out student loans, and you won’t be the only one.
According to the U.S. Department of Education, approximately 42.9 million Americans have federal student loans.
Student loan debt is a large source of anxiety for many current, former, and future students. However, for many people, college wouldn’t be possible without them. Whether you take out students loans is up to you, but here are a few things you definitely should know before making a decision.
This post is all about the most important things to know about student loans before enrolling in school this fall.
What You Need to Know About Student Loans
1. You May Not Need Student Loans
I run into so many people who think that taking out student loans is their only option for paying for college. This simply isn’t true. There are so many ways to pay for college.
For example, you could work after school or during the summers to save up money. When I was in high school, I worked as an after-school tutor to save up money. I was able to use this money to buy school supplies and textbooks.
Another option is applying for scholarships. Don’t skip applying for scholarships because you think you won’t win. You never know if you’ll be chosen or not. If you don’t get any scholarships while in high school, don’t worry. You can still apply for scholarships while enrolled in college.
I’ve personally applied to over 50 scholarships. I received five while in high school, and three after I started college. Overall, I ended up paying nothing for my college degree. In fact, I got PAID to go to school. To find out how I got paid to go to college, check out the article I wrote here.
If you still find yourself strapped for cash, try looking at more affordable colleges before making the decision to apply for student loans. Check out schools that aren’t as well known. You should also research community colleges as they can be up to three times cheaper than a traditional college. You can always transfer to a bigger school after you receive your associate’s degree.
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2. The Difference Between Subsidized and Unsubsidized Loans
I remember walking to class and overhearing a student mention that he was graduating college soon but didn’t know the difference between subsidized and unsubsidized loans. Don’t be like that person. Taking out student loans is a life-altering decision, and it’s very important that you understand the terms of your loan. Let’s break it down.
Subsidized Loans
Subsidized loans are available to students with demonstrated financial need as required by the U.S. Department of Education. Your financial need is determined by your FAFSA. This means that you may not be eligible to receive a subsidized loan if your expected family contribution is too high.
If you do receive a subsidized loan, you will not have to pay interest on the principal amount while you’re enrolled in school and up to six months after your college graduation. This gives you time to find a job before you accumulate additional student debt.
Unsubsidized Loans
Unsubsidized loans are federal student loans that are available to all students regardless of financial need. If you get an unsubsidized loan, you will accrue interest on your principal amount while you’re enrolled in college.
It’s important to understand that loans are complex. How much you’ll end up paying in total depends completely on your personal circumstance and your individual debt repayment plan.
However, according to the U.S. Department of Education, “subsidized loans offer slightly better terms” and are generally preferred by students.
{RELATED POST: Graduate College Debt-Free}
3. A Debt Repayment Plan is Crucial
You need a solid plan for paying back your student loans. This means that the career which you’ll be pursuing with your college degree should be able to comfortably cover your expenses.
For example, if you need $80,000 in student loans, but your ideal career has an average annual salary of $30,000, it is probably not a smart move to pursue that degree.
Keep in mind that your expenses won’t just include your student loans. You’ll also need to consider rent, car payments, car insurance, health insurance, renter’s insurance, utilities, gas, haircuts, clothing, vacations, food, pets, and furniture. Your expenses can vary greatly, so keep track of them and think realistically about your ability to repay your student loans with your expected salary.
Choosing a major you’ll enjoy is important, but so is being financially stable. You may have to make some compromises.
This post was all about the most important things to know about student loans before the 2022-2023 school year.
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