For some of you, this blog is an introduction to Federal Student Loans. For others, this is a reminder that July is time to figure out loans for a new school year. Either way, there are some key things below that you need to read and understand. If you have any questions about your existing loans or apply for new loans don’t hesitate to call one of our offices or reach out to us on any of our social media channels. We also have a great blog to introduce you to student loans.
What new college students need to know about student loans.
If you are new to the process the first thing you need to know is that you are not required to take out a student loan. You likely need the money, but there are other ways to pay for college and you should pursue those ways to pay first. Scholarships, grants and working all are ways you can get the money you need to pay for school. When these are exhausted, and you determine how much you still need, then look at student loans. You’ll get offered the max the school can give you for loans, but you can take out only what you need.
Second, limit the amount of money that you need. In my experience, many students overlook the power a good budget and financial planning can have over your loans. I tend to pass it off as a joke but living on ramen noodles and toaster waffles for four years really does free up your finances.
Finally, you have some paperwork to complete. You need to complete your FAFSA for the upcoming school year. After that, the school will have you complete a promissory note stating that you understand the terms of your student loans and counseling to help you understand the terms.
What current college students need to know about student loans.
For those that are getting ready for another school year, the process is easier. You don’t need to redo the promissory note or the counseling. You will need to tell the school how much of a loan you require. Like I said above, you will want to limit this to only what you can’t earn from other methods.
The most important thing for you to know is that the interest rate on your loans are going up. Last year, the loan you requested had a 4.45% interest rate. Whatever you took out for the last school year will stay at that rate. Whatever you need to take out for the 2018-2019 school year will be 0.59% higher at 5.04%. Over a 10-year repayment, this means you’ll be spending about $35 more in interest for every $1,000 you borrow.
I can’t stress enough the importance of knowing how much student loan debt you have and what the terms are for each year since each year is new. You all should read my tips on how to repay your student loans and start preparing now.
If reading this has sparked some questions go ahead and post a comment below and I’ll respond. DO NOT share any personal information as the chat is not private. If you need more personal attention then call our office and a specialist will be happy to take a look at your specific situation.