Everything You Need to Know About Student Loans
Choosing the right student loan for your needs is important, but the choices can be overwhelming. Here is everything you should know.
You may or may not be surprised to learn that at least 70% of American students take out a loan to attend college, according to Marketplace. If you or your child is headed off to university soon, that likely means you're exploring the financing options available to help pay for a top-notch education.
However, with the many loan options available and legal jargon used, it can feel overwhelming trying to understand everything. Luckily, we're here to help. Here are some of the most important things you need to know about student loans in 2020 and beyond:
There are two popular options to consider
If you've done some initial research on student loans, you likely came across two options: Federal and private. According to NerdWallet, these are the two main loan types you should first consider. Federal loans are typically the easiest to qualify for and have payment plans and forgiveness that are useful for a new student who may not have a long credit history.
Private loans, on the other hand, do not offer this protection and can be more difficult to qualify for. NerdWallet recommends you begin by taking out federal loans and only take out a private one if necessary (meaning if you maxed out your federal aid).
Most students will need to take a loan for higher education.
You should brush up on some common terminology
Refinancing, delinquency and APR are just a few of the terms you will come across when applying for a student loan. It's important to understand what all of these expressions (and more) mean, otherwise you may not fully grasp the terms and limitations of your loan.
Don't be hesitant to ask your lender or other trusted financial professional to explain any language or terms you're not familiar with.
Most loans come with a grace period
While it's important to be mindful of paying your loans back on time, most don't actually make you pay until after you graduate. Most student loans (both federal and private) come with a six to 12 month grace period , according to Real Simple. This gives recent graduates a little time to settle into their new lives and jobs before they need to make payments.
Of course, this doesn't mean that students can begin paying off their loans beforehand. If your loan accrues interest even during the grace period, it may be in your best interest to begin making payments when you can. Make sure to fully understand your repayment schedule and interest when talking with your lender.
Don't borrow more than you need
While it may feel like you should take out a loan with a little cushion in case your education costs unexpectedly increase, it's not advised to borrow more than you need or can afford. Calculate the current school expenses and take out a loan that just covers them. It's easier to take out an additional loan if needed than to be saddled with paying off additional debt.
If you have more questions about student or personal loans*, your local representative at Vectra Bank will be happy to answer them. Contact us today.
*Credit approval required. Terms, conditions and restrictions apply. See banker for details.