11 Things to Know About Student Loans

Jan 24, 2019 by

Student loans are usually uncharted territory for the average person. It’s important for a person taking out student loans to know everything they can about what they are taking out, money wise. Instead of making mistakes with student loans, there are things you should know about student loans! Check out these 11 tips to help you make the best decisions possible.

#1. Student loans should be a last resort

When you’re going to college, student loans can be a financial burden later in life. This is why you should only take out student loans if you have to. Seek out scholarships and financial aid first. If you have cash saved up, considering using this as well. Again, the least amount of student loans you have to take out, the better!

#2. Take out federal student loans before private student loans

Taking out student loans can be expensive, which is why you want to take out federal student loans first. Government loans always offer a better interest rate then private student loans do. Make sure you seek out federal student loans before private student loans.

#3. Most private student loans have a high interest rate

Private student loans typically have a higher interest rate than other student loans. This is because there is no collateral and this is the way the banks make money from student loans.

#4. Student loans are unsecured debt

Before you even take out a student loan, you should know that student loans are unsecured debt. This means that they cannot be released if you file bankruptcy. While some people may stop paying their student loans, this is not recommended.

#5. There is a difference between subsidized and unsubsidized  student loans

Federal student loans are where subsidized and unsubsidized student loans come from. The difference is that while you’re in school the government pays the interest on your subsidized loans. Keep in mind that government student loans usually have a lower interest rates then private student loans.

#6. Student loan interest is tax deductible

When it’s time to do your taxes, you’ll want to pay attention to how much interest you paid in student loans. The student loan interest that you paid is tax deductible up to a certain amount. This can help, when it comes to owing taxes, because you will probably be paying a lot of money in student loan interest.

#7. Some student loans require a co-signer

If you’re just entering college, you may not have enough credit to get a loan on your own. With this in mind, you may want to start thinking about a co-signer. Only get a co-signer with the mindset that you will be paying the student loan back. It’s never fun to get stuck paying back a loan that wasn’t yours to begin with.

#8. Student loans can be paid off quickly

Start paying off your student loans as quickly as you can. The more you can pay down your interest, the better you will be in the long run. You can pay off your student loans quickly, you just have to be dedicated to it. Every extra dollar you get, put it towards your student loans.

The extra money you’re putting towards it can help pay off the principal, which means you’ll have less money to pay off!

#9. You can take out as many or as few student loans as you want

Student loans are interesting in the fact that you can take out as much or as little as you want. Good advice would be to only take out as many student loans as you really need to!

Taking out a lot of student loans can put a lot of stress on you later in life. Just remember that whatever you take out, you have to pay back, so make sure you are settled on an amount you feel comfortable paying back.

#10. You can refinance your loans later down the road

Most people are given the opportunity to refinance their student loans later down the road. This is why it’s good to take extra good care of your credit. Good credit may be able to help you save money down the road. You can discover here more about student loans.

#11. Student loans can be done with various companies

Taking out a student loan doesn’t have to be done by one company. Do your research, so you can find a company that you trust! Since there are so many companies offering student loans, look for the best interest rates and loan terms possible. Remember this is your financial future being discussed here.

As you can see, there is a lot that goes into student loans. Read each of these tips to help you make a good decision with your student loans.

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