What are student loans?
- Student loans are loans made to people who are trying to go to college but cannot afford the college they are going to, or can only afford part of the cost. A student loan lends people the amount of money that they will need to pay for their tuition, this loan must be paid back over time with interest. The longer you take to pay it off, the more interest the bank will charge
Okay so quickly, explain interest?
- Banks just don’t give out thousands of dollars for free, they need to make money off of it too. So, they charge you interest (a % of the money you borrowed) depending on how long it takes you to pay back the money they lend you. If you pay it back in a year, the interest will be small, if it takes you 15 year, the interest will be significantly
I’ve determined I need a student loan, how would I go about getting one?
Well, it takes a few steps…
- First off, find out what college you want to attend to and what you can This way you can figure out how much money in loans you would need.
- You must then go to https://studentaid.ed.gov/sa/fafsa and fill out the FAFSA form. This form can also be found through your school’s financial aid
- Eligibility for the loan is based on your previous credit (a measure of how good you are at paying back loans). Since most students don’t have any credit, you will need a parent or legal guardian to cosign on the loan. This means that the cosigner is also responsible for repaying the
- Once you are approved for a loan, you will need to sign a promissory note which lays out the terms of the loan (interest rate and repayment).
- Make sure that you will be able to pay the loan back in a timely manner, or else the debt will affect your future credit and may affect your ability to get a loan for a car or a
- Make sure you go to a school that is Some schools cost upwards of $70,000 a year and loans can start to exceed $200,00 if you’re not careful.