It’s a big step, taking out student loans. It can seem like a lot of money and a lot of responsibility, but if you’re ready to make the investment, there are some important things to consider before you dive in.
First, it’s important to do your research. There are all sorts of variables: how much you can afford to pay each month, what kind of repayment plan will work best for your situation and your career goals, and who your loan provider is. Search online or speak with people who have taken out loans through to learn what they did and what worked for them.
Once you’ve decided on a plan, set up an appointment with a financial advisor. They’ll help you figure out what options are available to you so that you can make informed decisions about how much interest you’ll be charged on any loans or whether there are other ways to save money while still having access to student loans.
1. Only Borrow what you need
It’s important to keep debt at a manageable level. If you only need $5,000 to cover tuition costs this year, then take out just that amount. You may not even qualify for federal loans, which means you won’t have to worry about paying back more than you borrowed.
If you need more than $5,000, however, you should think carefully about how much youcan borrow. The most common type of student loan is called a subsidized Stafford Loan, which has lower monthly payments than unsubsidized loans. But you’ll also have to pay taxes on the interest you earn on these loans, and you could end up owing more than you borrowed. So, if you know you need more than $10,000, talk to a financial adviser first.
2. Pay off as quickly as possible
If you can, try to pay off your student loans as soon as you graduate. That way, you’ll avoid accruing interest charges and you’ll have less to repay when you start earning income.
3. Consider refinancing
If you’re able to refinance your student loans, you might be able to reduce your monthly payment by hundreds of dollars. You can contact your lender/lenders to find out if you qualify.
4. Don’t forget to factor in tax breaks
The government offers several types of tax breaks for students. For example, you can deduct the interest paid on your student loans from your taxable income. And if you use your home as collateral for your student loans, you can deduct mortgage insurance premiums. Talk to a financial planner to see if you qualify for any of these benefits.
5. Be sure to keep track of your payments
Make sure you keep track of your payments. This helps you stay on top of your finances and makes it easier to budget for future expenses.
6. Keep your eyes open for scholarships
There are many opportunities to receive scholarship money throughout college. Your school may offer scholarships based on merit, but you can also apply for national scholarships like the Pell Grant. Check with your school’s financial aid office to find out if there are any additional resources available to you.
7. Get ready for graduation day
Graduation day is a milestone in anyone’s life. It’s a time to celebrate, but it’s also a time to prepare yourself financially. Make sure you have enough saved up to cover all of your living expenses until you land your first job.
8. Start saving early
Start saving now. It’s important to keep track of all your small expenses because a penny saved is as good as a pound earned. Put aside 10% of each paycheck (or whatever you can afford) and invest it in a savings account.
Keywords: Tips for taking out student loans
