‘Tis the season. Ok, so that line can be used for a lot of seasons. This one, specifically, is that season of the empty nesters. Drive by any college campus and you will know what I mean. There is the happy student that can’t wait to be on their own, the stoic father standing by offering quiet support, and the mom tearing up over her baby all grown up. Yeah, maybe it’s a little idealized, but you get the point.
It’s also the season of signing. I’m not aware of any school that will let you attend classes without their knowing how they are going to get paid. So you have to go sign all of those student loan documents. I’ve been there. “Just sign by the X”, and so we do. With the ever increasing student loan amounts, I wanted to offer up 20 questions you should be able to answer BEFORE you sign by the ‘X’. You may not think about it for another 4-5 years, but now is the time to make sure you get it right.
So here’s what you need to know:
- How much is the loan for?
- Do I need to take the full loan amount?
- SHOULD I take the full loan amount?
- What is the interest rate?
- What is the Annual Percentage Rate (APR)?
- What the heck is the difference between the interest rate and APR? (It can be a big one!)
- What type of loan am I getting?
- Does the interest start building now or after I graduate?
- When do I have to start repaying the loan?
- What happens if I can’t afford to pay the loan?
- Is this one of those loans that can be forgiven?
- How do I get one of those forgivable loans?
- What happens if I decide not to finish school (or even the semester)?
- Do I want a private student loan or government student loan?
- If I don’t pay, are my parents on the hook?
- What can I actually use my student loan funds for?
- Am I going to be able to consolidate my student loans?
- What happens to my loans if I decide to switch schools?
- Can my ‘colorful behavior’ at college affect my loan eligibility?
- Will student loans affect my credit report (and should I even care)?
So there you have it. I could probably go on, but then I would need to go back and change the title of this blog post….
Yes, it’s a lot to think about. But when you consider that you may be tied to these loans for the next 20-30 years, it IS a big deal. It is important to get it right from the start. Can you imagine graduating with a bachelor’s degree and then having to move into your parents’ basement again because your student loan payments are half of your monthly income or more? You better believe that is reality for some graduates, even some with Maters degrees.
While many college students don’t really even think about their student loans during college (speaking from experience), getting it right now means a little less worry during college and a lot less worry after you graduate. You will be better set up to enjoy the fruits of your labor rather than simply feeling tied down by debt.
If you If this has piqued your interest and you want to know more, the counselors at the Center for Financial Resources are ready to help you figure it out. Because there are so many different loan types out there, there is no standard answer to any question. But we can help you get the information you need to make an informed decision. You can either call us at 605-330-2700 or check out our website to schedule an appointment.
And if you really want to be entertained, take this list of questions along to the financial aid office…..
written by Breck Miller
images courtesy freedigitalphotos.net