Factors to consider when taking student loans? Chasing your educational dreams is crucial to your success as it opens doors to many opportunities. I understand that not everyone can afford the high cost of higher education and as such I am here to help you with some of the alternatives you can use to fund your college or graduate school education.
Many choose “Student Loans” as their first option to sponsor their education. While this option gives you the necessary support to pursue your dreams, it leaves you in debt. There are many options you can utilize. In this post, you will learn when to consider taking student loans.
Factors To Consider When Taking Student Loans
Deciding to consider student loans as an option to fund your education could be scary as one wrong decision could ruin your life. This is why you have to only consider it when every other option fails. Here are some important factors to pay attention to before you consider taking student loans.
Financial Aid
Explore all available scholarships, grants, and work-study options before turning to loans.
Cost of Education
If the total cost of your education (tuition, fees, living expenses) is way above what you can afford through your savings, scholarships, or grants, a student loan may come in handy. This is because you have exhausted all other options to fund your education so considering a low interest rate student loan will go a long way to help you achieve your goals. Try your best to avoid private student loans (they always come with high interest rates).
Expected Income
Before you consider taking student loans, be sure to research the average starting salary in your potential career industry. If you find out that your future income will justify the loan amount, it might make sense to go ahead and take that student loan.
Loan Types
Your understanding of the various student loan types will significantly affect the decisions you make when considering student loans. As such, make sure you understand the difference between federal and private loans. Federal loans often have more flexible terms, such as lower interest rates and flexible repayment options whereas private loans are the exact opposite.
Repayment Plans
When taking a student loan, one of the most important things to do is to look into the repayment options and terms. Some loans offer income-driven repayment plans, which can make managing your debt easier after graduation whereas others are the exact opposite which can lead you into a lifetime of debt.
Job Security
Consider the job market in your field. If it’s strong, you may feel more comfortable taking on debt.
Total Debt
What will be your total loan debt after graduation? Keep track of how much debt you’ll accrue if you should take that student loan. Try to limit borrowing what you can realistically repay.
Long-term Goals
Before you take that student loan, reflect on your career and life goals. Will this degree significantly impact your long-term earning potential? If the degree will have no significant impact on your career in the long run, then it is not advisable to consider taking a student loan to fund it. This is because you might end up not being able to repay your loan.
