Why Student Loans Can Help You Get A Degree Faster
Are you wondering how student loans can help you finish college faster? Speaking from experience, I can tell you that they provide help when other help runs out. But you need to be careful.
I’ll give you some ins and outs of loans and how to use them to finish up your degree.
When should you get a student loan?
You should get a loan if you have no other reasonable way to pay for school. Don’t go to Vegas thinking you can win the next Poker tournament. Yes, some people do win, but it’s not likely.
A loan can make studying easier and going to school at a college or university smoother because you don’t have to work as much. Also, you won’t constantly worry about money.
You cans study more, take more classes or attend more semesters without breaks if you have a few reasonable loans. But don’t go hog wild; just use them for the expenses you can’t cover other ways.
Less in loans means less money going out after you graduate, so be careful where you use them.
This isn't financial advice, of course. You'll need to talk to a financial professional if you want that. Speaking from experience, I can say that I'm glad I limited how much I borrowed, and that my income can support me.
Types of Loans
Basically, you have two types: private and government guaranteed loans. Private student loans come from banks and have their own rules, and usually higher interest rates as well. You can get a private loan at many banks. You may need a cosigner, and you may need a high credit score to qualify.
Government guaranteed student loans offer lower rates, prolonged payback, and the option to get a consolidation loan after school. That consolidation loan may make the interest rate lower, too.
The government loans usually fall into three categories: Stafford loans (used to be GSL’s), Perkins, and Grad-PLUS loans. Grad-PLUS stands for graduate student and parent loans for undergraduate students.
All three have some different rules, but work somewhat the same. And one thing they all have in common: you have to need the money to qualify for the loan program. For all of these, you need to turn a FAFSA form to verify qualification.
Student Loan or Scholarship?
Granted, a scholarship is better. If you can get a scholarship, by all means, take it. A loan can fill in gaps in other ways. You should keep your loans to a minimum. And pay them off as quickly as you can.
Last, be careful of using loans if your career field will require many years before you develop an income large enough to pay off the loans. If your first few jobs will have low pay, you may want to spend time working to pay cash for your expenses.
Using loans and even a consolidation loan won’t make up for a lack of resources in the future. Some students graduate with a debt load that would have bought a luxury car or even a new home. Borrowing that much to finish college will limit your future. Be frugal, and just use loans when you have to.