Many college students have to take out student loans in today’s world because the costs associated with attending colleges and universities can be quite high. Taking out students loans to pay for higher education is actually quite simple, but some students seem to be afraid to take the leap and actually get the student loan. Taking out student loans is certainly better than increasing your credit card debt to pay for college.
The 5 most common student loan misconceptions discussed here should help prospective students feel less afraid of securing loans for school.
Getting Student Loans Requires Work
One common misconception college students have is that trying to get a student loan will be too much work. They think the process will be like trying to get good car insurance. They imagine themselves calling around or surfing the web to get different quotes and having to fill out massive amounts of paperwork.
In fact, obtaining a student loan is nothing like that. To get federal student loans, all a student has to do is complete the Free Application for Federal Student Aid (FAFSA). This one form can be filled out online and costs the student nothing. Filling out this one form will let students know if they qualify for federal student loans and for how much they qualify in a given year.
The financial aid office at a given college or university will actually spend more time on the paperwork than the student actually has to spend.
Students Can’t Get Other Aid with Loans
A second common misconception is that students who take out loans cannot also get other forms of financial aid. Actually, students can get scholarships, grants, and any other financial aid in addition to student loans. Student loans can be combined with other forms on aid with no problem.
If a student is getting multiple forms of financial aid, the best way to handle this is to use all money that doesn’t have to be paid back first. Students should apply all scholarship money and grant money to the balance owed to the school. Then, students should only take out student loans for the balance after all other money has been applied. This means students may not have to take out large loans for school.
Students Must Wait to Pay
The third common misconception about student loans is that students think they must wait until after graduation to start paying back the loans. This is simply not the case. Students who work while attending college can start paying their loans back immediately. This means they won’t owe as much once they graduate.
In fact, it makes a lot of sense for students to try to pay for their loans while in school. This will help them financially when they graduate. Once students graduate, they will need their money to pay for housing and other adult expenses. Having to pay for college loans immediately after graduation can take a portion of a student’s monthly income.
Students Won’t Get a Good Interest Rate
Another common misconception students have is that they won’t get a good interest rate on their student loans. They are worried that they won’t be able to afford the student loan payments after graduation because the interest rate is so high.
The truth is that most student loans have very low interest rates. The government wants students to go to school and get their education. Therefore, students should feel secure that they will get a great interest rate, which will keep their monthly payments low. In fact, some students are able to pay more than the minimum payment because of the low interest rate, which means the loan is paid off faster.
Students Will Have to Pay the Whole Amount
A final misconception that many students have about student loans is that they will have to pay back the full amount they borrowed. The loan amount can seem overwhelming, especially to students who are just starting out in the world.
The truth about paying back student loans is that many borrowers find that they don’t have to pay back the full amount or don’t have to pay back any of the loan after graduation. This is due to student loan forgiveness. Students should read the fine print associated with their loans because some lenders will forgive student loans for certain reasons. Loan forgiveness means that a loan does not have to be paid back at all.
Some lenders will forgive student loans for students who go into public service related fields. For example, some student loan lenders forgive the entire student loan amount for students who teach in low-income areas or in hard to staff schools if they will teach for five consecutive years. Nurses, police officers, and firemen can usually also have their loans forgiven.
Students who take out student loans need to be aware of loan forgiveness programs and contact their lenders to find out more information. Even if the whole balance isn’t forgiven, it is possible that a percentage can be forgiven based on a student’s field of employment.
When common misconceptions are cleared up, students can learn the facts about taking out and paying back student loans. Armed with correct information, students can feel good about borrowing the money needed to complete their chosen degree programs.
Students in today’s world need to be educated to be competitive in the job market. The only way to do this is to find money to attend college.