If you are a young adult planning for the future and your family or your parents can’t afford to fund your college education, your only choice is to avail a scholarship, full scholarship if possible so there wouldn’t be any major hindrance in pursuing your college education. But then some people aren’t lucky enough to qualify for a scholarship, therefore they resort to applying for a student loan. Student Loans are another way of fulfilling an educational goal and it is very common among many college students these days.
If you are considering to pursue your college degree through a student loan, here are important things that you should know before you dive into this major life decision.
There are two types of student loans – securing from the federal government or from a private financial institution.
The Federal Student Loan is a flexible loan provided by the federal government. The Congress decides how much would be the interest rate for each year.
Private Student Loan, on the other hand, is a type of loan applied from banks and other financial institutions.
When you already decided which loan will perfectly serve you, the next thing you should know is if you are qualified for the loan and each type of student loan comes with its own requirements.
Here are the main requirements for a federal student loans:
· You must have a financial need for Direct Subsidized Loans.
· You must be a U.S. citizen or eligible noncitizen. Some legal U.S. residents without citizenship might still qualify.
· You must have a Social Security number.
· You must be enrolled in an eligible degree or certificate program.
· You must make satisfactory academic progress.
· You must have qualifications needed for your program: A high school diploma, GED, homeschool program, or equivalent is required.
For private student loan, here are the common requirements :
Do note that unlike federal loans, private lender has its own rules; and the set of rules differ from one lender to another.
· You must be a student and you must be enrolled in an eligible program.
· You must meet demographic requirements – a U.S. citizen or legal resident, at least 18 years old, has a high school diploma or equivalent, , and has a Social Security number.
· You must use the loan for education purposes. Lenders won’t watch where you spend every dollar but you should plan to use the money to where it is really intended for, which are the school expenses; because you will still have to pay everything back, up to the last cent in the future.
· You must have a good credit history. A credit score of 700 or higher increases your odds of being approved.
· You must have verifiable income. Your income and debt-to-income ratio will determine if you’d be able to repay what you borrow from the private lender.
When it comes to student loans, you can’t file for failure to pay due to bankruptcy. You have no other option but to make full payment. The federal government has the authority to deduct payments from your income, if you failed to pay your dues. Be sure to make a solid financial plan for your student loan. .
For more ways on how to effectively manage your student loans debt, click here.
Getting any kind of loan is a huge responsibility. Student loan is a big help but always be responsible where and how you will spend it so that you’d really reap its full benefits for your future financial stability.