You should think hard before taking out a student loan.
Summary: Before you take out a loan, here are 7 things you should consider first: other financing options, prioritizing federal and subsidized loans, understanding how much you need to borrow, looking for cost effective schools, college-bank partnerships, how you will pay it back, and your ability to repay. SoloSettle can help you settle your student loan debt and move on.
When you start preparing to go to college, one thing may be constantly on your mind. How will I pay for it, exactly?
Student loans may be the first idea to pop into your mind. But hold your horses and don’t sign the first contract a bank representative offers you! Taking out a loan is a years-long commitment – you’ll be paying it off literally for decades.
So, this is where doing your homework matters – a lot. Unlike some papers that you can offload to a professional essay writer, doing your homework on your financing options is something you absolutely have to do yourself. Here are the seven things you should consider before you settle on a decision.
Loans have to be repaid. Student loans, particularly private loans, are also exempt from bankruptcy: even if you declare bankruptcy, you’ll still have to repay them. (Note that their federal counterparts may have varying forms of debt forgiveness.)
So, avoid borrowing as much as you can. Consider these five financing options before you even start thinking about getting into debt:
Federal need-based aid (fill out FAFSA to see if you qualify for it)
College-specific need-based scholarships and grants
College-specific excellence scholarships and grants
State college financing aid
Working part-time during your studies (you can also try a work-study program)
2. Prioritize federal and subsidized loans
Not all student loans are created the same. To minimize your interest rates and benefit from other perks, first apply for federal loans. FAFSA is the way to do it. Along with lower interest rates, federal student loans also have income-based repayment and some forgiveness options.
Once you max out your federal loan capacity, look for their subsidized counterparts. They’re partially funded by the federal government, so the terms are way better. However, they’re need-based – so, check if you’ll qualify for them.
3. Understand how much you’ll need to borrow
Without this estimate, you may be all too tempted to take out more than you actually need. Yes, it may be a huge relief to have some extra money for hiring the best paper writing services or hanging out with friends. But that money isn’t free. You’ll have to repay it later on – with interest.
So, estimate your total costs and subtract all other financing sources. Remember to account for:
Textbook and other material costs
Accommodation and utility costs
Transportation costs (if any)
Running expenses like groceries
Try to keep your costs to a minimum and borrow only as much as you absolutely need.
4. Remember that expensive doesn’t always equal high-quality
Before borrowing that amount you’ve estimated, ask yourself: is there a way you can bring down your tuition costs? Perhaps, you can go to college in your state – out-of-state tuition fees can double or triple the amount you’ll need to get a degree.
Consider public or community colleges, too. While they may not have the same prestigious brand as Harvard or MIT, they can still teach you the same skills – without costing you a small fortune. And in some cases, tuition costs are simply overblown because of that prestige.
5. Check for college-bank partnerships
Some colleges collaborate with banks to offer more interesting loan terms to their prospective students. So, see if your preferred colleges have such a partnership with a bank – it can be a good deal.
Make sure to overlook no detail when you explore the offer, however. While the terms may be better, that’s not guaranteed. And you’ll definitely be better off with a federal or subsidized loan!
6. Understand how you will pay it back
Before you take out any kind of loan, read that fine print as many times as you need to answer these questions:
How long will you be repaying this amount? Keep in mind that the longer you take to repay, the more you’ll owe in interest.
How big will your monthly payments be? Will they be fixed or variable?
What’s the interest rate? When do you start accruing interest?
Will you have to repay the interest before the borrowed amount itself?
When will you have to start repaying? Will it be after you graduate?
It’s also a good idea to look into starting salaries in your preferred field before going into debt. This way, you’ll have an inkling of how much you’ll be earning – and how much of your income you’ll be able to afford to send to your loaner as a monthly payment.
7. Don’t overestimate your repaying capabilities
It’s no easy feat to try and figure out how much you will be able to afford to borrow and repay – and on which terms – even when you’re in your 30s or 40s. But it’s even tougher when you apply for college: you simply lack life experience.
So, too many young people end up overestimating their future financial situation, as well as the degree’s return on investment. Be aware of this caveat when you answer the questions above. Take your initial estimates and reduce them by 20-30% for a worst-case scenario.
Let’s recap your pre-borrowing journey, step-by-step:
Secure other financing options before borrowing.
Max out federal and subsidized loans if you can.
If you still need additional financing after you complete the previous two steps:
Consider minimizing your tuition costs by choosing a less expensive college.
Look into college-bank partnerships.
Compare various loan options in terms of the interest rate, repayment options, and duration.
Check out starting salaries in your desired occupation.
Be reasonable when estimating your future repayment capabilities.
Settle your student loan debts with SoloSettle
If you want to settle your student debt, try using these steps:
Determine if you want to settle with a lump-sum payment or monthly installments.
Calculate how much you can afford to pay off.
Contact the debt collectors and make an offer.
Negotiate a settlement.
Get the debt settlement agreement in writing.
SoloSettle can help make the debt settlement process simple.
Powered by SoloSuit, SoloSettle is a tech-based approach to debt settlement. Our software helps you send and receive settlement offers to creditors and lenders until you reach an agreement, allowing you to settle your student debt outside of court. While you may want to win the lawsuit and pay nothing, agreeing to close the case by paying less than the face value of the debt could be more realistic.
You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.
SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.
And 50% of our customers' cases have been dismissed in the past.
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