Personal Credit Coach

Three Things You Need to Know before You Take a Student Loan

Stephen Leifer - Friday, March 17, 2017

Student loans can be a good way to pay for higher education.  For some people they are a necessity.  Here are three things you should know before signing on the dotted line for your student loan:


Public and Private Loans are Different


You can accept both public and private loans to pay for college.  Public or federal loan are issued by the government, have interest rates that are set by congress, and offer a variety of benefits as well as shortcomings.  They are non-dis-chargeable in a bankruptcy, with few exceptions, and are funded by taxpayer dollars.


Private loans, on the other hand, are issued by a private financial institution.  Their interest rates are usually higher and you do not enjoy the same benefits that come with a public loan.  However, they can be of great use to student borrowers, so you should not automatically assume they are not an option for you.


Repayments Can Be Tricky


If you piece together a few different loans to pay for college (it is not uncommon to have more than one loan), it can be tough to know what you owe and to whom you owe it.  It’s important to get organized and figure out your debt load as soon as possible.  Not only will you need to pay the lender each month, you might have questions or requests. 


Understanding how your student loans are organized makes this easier.  You might also want to look into consolidating multiple loans, which can reduce the interest you pay and make it easier to manage your loans in general.


Consider Refinancing


Just as you can refinance a mortgage, you can refinance a student loan.  Depending on your credit score and income, you might be eligible for a lower interest rate through refinancing.  The process of refinancing can be tedious, but it’s worth it to save you thousands of dollars in interest over the life of your loan.


If you would like to know more about student loans, give us a call!

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