The 6 Most Important Things That Will Influence Paying Back Student Loans

It is said that education does not bear as much importance as it used to. However, this is not entirely true. Education is as important as always and statistics show that people with higher education not only earn more every week (about $400/week), but they are less likely to be unemployed as well.

Higher education comes with a price though and a majority of the people cannot afford paying tuition fees out of their own pockets. Student loans are a great alternative to this – but before you strike a deal with anyone, you should first inform yourself on what that means exactly. Even more, you have to inform yourself on what paying back a student loan actually means.

What are the most important things to know about student loans and paying them back? Read on and find out more.

Research the Types of Loans

Taking a loan of any type is a great responsibility and you should never engage in something this important without being very well-informed first. One of the first steps to taking a student loan is researching your options. Take all student financing opportunities into consideration and be absolutely certain that you do not rule out anything without giving it some thorough thinking. Some of the most important financing options include scholarships, state and federal grants, federal loans and bank loans – and they all come with advantages and disadvantages too. Do the research, shop around and settle on the loan that is most suitable for you.

Choose Your Bank Loan Carefully

Considering the fact that the price of tuition fee can get as high as approximately $20,000 (and even more, especially in the case of the Ivy League Universities), it is very likely that you will not be able to cover all the expenses with scholarships and grants. Furthermore, federal loans can only cover for a part of your tuition fees so you will most probably need a bank student loan too.

When doing this, be sure to choose the type of bank loan that truly suits you and your needs. As Metro West Credit Union shows it, you have multiple options when it comes to the paying back a student loan so you should do your research and pick the one that is best for you.

Know the Eligibility Criteria

Once you have decided on what type of student loan(s) you need to take, you will also have to find out more about the basic approval criteria too. This will help you get all your paperwork ready and it will also help you increase your chances of being approved as well.

In most cases you will need to bring in one or two co-signers to guarantee that paying back the student loan will not be a problem. Depending on how they earn their income, they will also have to bring in adequate paperwork to prove their income. Be sure to have all this paperwork in order by the time you apply so that you don’t waste any more time trying to put everything together.

Make Sure to Do the Math before You Take Out the Loan

It is extremely important that you are aware of the fact that taking a loan is very much about "numbers". Doing the math before you strike a deal can save you from a lot of financial problems later on, so be sure to do this. Also, think of how much you need to borrow (and how much you are willing to borrow too).

Furthermore, inform yourself on when the repayment period starts and on how much you will need to pay back (and this includes both the monthly payments and the total repayment sum too). Taking all these issues into consideration can go a very long way when it comes to keeping yourself financially safe after graduation.

Have a Repayment Plan in Mind from the Very Beginning

Student loans are just like other types of loans – if you don’t make repayments in time, you will default and this will affect your credit score (which will consequently affect your ability to borrow money). Even more than that, you should also know that student loans (be them private or federal) cannot be discharged through bankruptcy.

Under these circumstances, it is extremely important that you have a real plan when it comes to paying back your student loan. Before you take out the loan, think of how you plan to repay it. Think very well of how much you are expected to earn after graduation and create a plan that will help you repay the entire student loan as soon as possible.

Decide on the Right University

This comes without saying, but deciding on the right university is as important as any other student loan tip of advice you will ever receive or read about. The university (and degree) you choose now will most likely affect the rest of your life – and thus, it will also influence how able you will be to repay your loan as well.

One of the most important things to think about is whether or not you are willing to invest in Ivy League education. One year of tuition fee in an Ivy League University can cost as much as $40,000 - $47,000, but many say that this should be seen as an investment. In terms of the actual education, many non-Ivy League universities provide the same quality for their students.

However, the difference between an Ivy League graduate and a state college graduate lies in how employers perceive them. According to USA Today, Ivy League graduates’ resumes stand out in the eyes of the recruiters. Moreover, graduates from Ivy League are much more likely to create stronger social networks – and this also means that they are more probable to land on better jobs (and sooner after graduation).

In Conclusion

Although a lot of people may argue, higher education can still make a big difference. If you plan on pursuing it though, you should be very careful about the ways in which you choose to finance your studies. As shown above, there are many financing opportunities available for a wide range of future students – but it is crucial that you choose the ones that genuinely fit you. Last, but definitely not least, it is extremely important that you know very well what to expect from the future as well. Paying back a student loan can be difficult and every single step you make before you actually take the loan will greatly influence how able you are to pay your debts in the end.

Theresa is a guitar player from Michigan. She started her own band a couple of years ago and regularly plays clubs from all across the state. Writing is her second biggest passion after music.