As one college semester starts and a new one is soon to begin, some of you might be shopping for student loans. But with all that money being borrowed in your name, you'll definitely want to make sure that you don't get duped. So, Jimmy Rhoades sat down with student loan expert, Brianna McGurran, to find simple strategies to pay for college that won't come back to bite you once you graduate.
1. Use What You've Got
Before you start looking for loan lenders, try to see what options are available to you, that won't require you to pay money back later. Your first money-searching step should be looking for and applying to scholarships, applying for grants, or looking for work-study programs. Doing so will, either, keep yourself from needing to get loans all together, or, help decrease the amount of money you'll have to take out with a loan.
2. Using Federal Student Loans
This user-friendly loan has a couple of perks that makes it a go to payment strategy for many who choose loans as a way to pay for schooling:
- Flat interest rates that are generally lower than private student loan interest rates
- The ability to sign up for an income-driven repayment plan, which lowers your bill to a percentage of your income. This is particularly helpful because you can worry less about having to make large payments with money you might not have, due to being fresh out of school.
- Eligibility for loan forgiveness, particularly if you get out of school and work in a public service job, like any government position or a non-profit position, and make payments through the Public Service Loan Forgiveness Program
3. Using Private Student Loan Lenders
Borrowing from private student loan lenders can be a bit tricky, so experts say, don't consider them your first option when it comes to paying for school If you've exhausted any other option for college - or if you need a little more financial help - then, you can start looking at private lenders, but look for ones that offer these elements:
- Fixed interest rates: Currently, interest rates for these types of loans are set to increase in the next couple of years, so lock them in sooner, rather than later, to keep the rate you get for the duration of your loan.
- Look for flexible repayment terms: These will help you stay protected for longer when it comes to repaying your loan. If you get a loan with fixed payments, and change jobs or lose your job, non-flexible terms could affect your ability to pay those loans back.
- Co-signer release: If you're planning on getting a loan alongside a co-signer, look for private loans that offer cosigner release, which give a co-signer the ability to come off a loan after a certain amount of years of on time payments.
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