With the financial aid award letter comes a host of to-dos and decisions. Here are ten tips to help you stay on top of it all:
- Borrow only what you need. After you look at your full financial picture – education cost, awarded aid, and family share – settle on the amount you actually need to borrow. You’re not required to accept all you’re offered.
- Consider working. With a paycheck coming in, you won’t need to borrow as much. Although a job can be a burden, struggling to repay your loans after college isn’t any fun either.
- Know what you’ve been offered. Looking at your award letter, focus on any need-based loans and note the amount. If you feel you need to borrow more, get advice from a financial aid counselor at the college.
- Finalize your loans on time and follow instructions. In some cases, it can take time to complete the loan process. Make sure you finish the paperwork in time for your college to receive the money before the first payment is due. Mistakes can also cause delays.
- Shop around. If you decide you need a private (alternative) loan or if you need to choose a lender for a federal loan, take the time to compare interest rates, fees, repayment options, and borrower benefits. Your college will probably recommend certain lenders, but you’re in no way obligated to borrow from them.
- Question lenders and your college’s financial aid counselors. To get the facts up front and minimize unpleasant surprises down the road, ask questions like these: How much will this loan cost me in the long run? What will my monthly payments be? Will I qualify for the advertised interest rate? If not, what rate will I be charged? Is it a fixed rate or will it change periodically? Will my costs change if my loan is sold?
- Apply for a private loan only after you’ve done the research. Private loans require credit checks, and multiple credit checks can lower your (and your cosigner’s) credit score, making it harder to qualify for other loans.
- Don’t be surprised if fees take a bite out of your loan. In the case of some government loans, fees are subtracted from the full loan amount before the check is sent to your college.
- Know what you’re signing. Before borrowing, make sure you understand the terms and conditions, such as repayment requirements, spelled out in your promissory note (contract).
- Consider making interest payments on unsubsidized loans as a student. They won’t be much and you’ll end up having to pay back significantly less than if you delay. Look for ways to save money for payments, such as buying used books.
Source: Collegebound.com
