Student loans and debt seem to find themselves in the same sentence often. It is not surprising considering the exorbitant college fees that students have to pay to get into university.
Even the fortunate few who manage to secure grants and scholarships, and so on find this to be an uphill battle. You are probably at a point where you are in dire need of extra funds due to the lack of other viable options to get into college. Your best option in such a situation is availing student loans. There are a few factors you ought to consider before you select a student loan.
What should you consider before opting for a Student Loan?
For starters, you are better off opting for federal student loan options. However, if you plan on applying for private student loans, keep in mind that not all private loans are the same.
Each student loan can vary from lender to lender. Some lenders offer more flexibility than others for repayment. Here are some factors you ought to consider:
The repayment term refers to the amount of time you will take to repay the loan amount. While paying the back soon can ensure your overall cost is lower, you will have to make larger repayments every month. Picking a longer loan tenure can help ease the monthly repayments at the cost of having to pay an increased overall loan repayment.
There are primarily two types of interest rates, namely, fixed and variable. The best student loan lenders generally offer both options. However, keep in mind that every lender’s interest rate is different.
Options for Repayment
The repayment option refers to how you need to make your loan repayments. The primary factor that most students consider is the option of repaying the loan while in university or after graduation. It is generally recommended that you make loan repayments while in university to reduce the loan’s overall cost.
What do I Need to Qualify for a Private Student Loan?
Different student loan lenders tend to have different criteria for eligibility. However, most lenders consider your credit score and monthly income. It should not surprise you that the higher your credit score and income, the better your interest rate is going to be.
However, considering how student borrowers or undergraduate borrowers are highly unlikely to have an above-average credit score or source of income, lenders generally require such borrowers to apply for these loans with a co-signer.
Some lenders will allow you to borrow without a co-signer, provided your career and income potential meets their requirements.
Getting a Private Loan with Bad Credit
A bad credit score can plague your chances of availing a private student loan. Unlike federal loans, private lenders judge your trustworthiness by your credit score, source of income, and other factors.
You are better off applying for a federal student loan if you find yourself in this situation. However, if you have exhausted your federal loans or chances of applying for one, your best bet is applying for a private loan with a co-signer.
Student loan Forgiveness
These may sound too good to be true, but student loan forgiveness programs release you from the compulsion of repaying a part of the loan or the entire federal loan itself. As great as it sounds, most people do not qualify for this.
Eligibility requirements can vary depending on the type of loan. That said, student loan forgiveness is generally offered to those employed in specific service occupations.
Student Loan Forgiveness Programs
Here are some of the better-known student loan forgiveness programs:
Public Service Loan Forgiveness
Public service loan forgiveness programs are generally available to government employees and non-profit employees with federal loans who qualify for the same.
Eligible borrowers have the option of having their outstanding loan balance forgiven after having made 120 loan payments. To take advantage of the public service loan forgiveness program, you will have to make these loan repayments while you are a part of the income-driven repayment plan.
Income-Driven Repayment Forgiveness
The federal government offers you four primary income-driven repayment plans. These plans enable you to cap your loan repayments at a specified percentage of your income.
If you choose to enroll in one of these repayment plans, you can have your balance forgiven after a period of 20 to 25 years. This time frame depends on the plan in question.
Student Loan Forgiveness for Nurses
Nurses who are facing the brunt of student loans have a bunch of options for student loan forgiveness, including public service loan forgiveness, NURSE Corps Loan Repayment Program, and so forth. The public service loan forgiveness program, however, seems to the most feasible option for them, given how the other ones are difficult to avail due to the competition.
State-sponsored Repayment Assistance programs
State-sponsored repayment assistance programs can help nurses, doctors, licensed teachers, and lawyers in specific states repay their debt. You will have to get in touch with your state’s higher education department to find out if you are eligible for this student’s forgiveness program.
If you find yourself struggling as a student to make it into university due to lack of funds, student loan lenders, and student loan forgiveness programs are two things you ought to look into. Doing your research and building up your credit score can do you wonders.