By Marpessa Oliver
If you are a high school senior or a college student you most definitely should have your attention on your financial condition. If you don’t instead of majoring in your field of choice you will be majoring in college debt. Federal student loans are offered to most students entering college. Many students would not be able to attend their chosen College or University if it were not for College Loans. For that reason, so many students get into large amounts of debt and have problems with student loan repayment after graduation.
Student Loans Are YOUR Responsibility
Often Students are so desperate to attend college they sign their lives away not knowing the loans will have to be paid back by YOU.
The Difference Between Student Loans
Subsidized loans are not due until 6 months after the last day you attend school. The interest is paid by the government while you are in school. Unsubsidized loans are due when the loan monies are disbursed. Payments on the Principal can be deferred until graduation however the interest accrues from the day the funds are released. The interest can be deferred also, however, keep in mind that the interest can be capitalized meaning it can be added tot he principal and the new amount will be used in charging interest on your loan.
Loan Amounts Can Increase Each Year
Student Loan limits increase each year. While this is good in that you can borrow more it is bad for the same reason. Please keep in mind the more you borrow the more you will have to pay back.
Failure To Pay Your Student Loans Will Ruin Your Credit
Upon graduation, the excitement of finally being a college graduate can be clouded by the fact that you have a large amount of student loan debt. If you do not make these payments, it will be reported to the credit agencies and negatively affect your credit score. Your credit score is a valuable asset when it is a positive score. It allows you to buy a house, buy a car etc. There is no statute of limitations for the repayment of Student Loans. It will be reported to the Credit Agency for the rest of your life.
Deferments Can Be Dangerous
There are all types of deferments available to you upon graduation if you are unable to make loan payments. While a deferment is a better option than not making your payments at all, they should ONLY be used when you absolutely can’t make the payments. While in deferment interest accrues on the principal and any capitalized interest. Your debt will continually increase while in deferment. Making your repayment period longer
Remember loans are just that — LOANS. They have to be paid back by you upon graduation. You can only be in forbearance or deferment for so long before the interest and principal payments start to become a major financial barrier. You do not want to go into default and have that on your credit report. If you must take loans please keep in mind that you will be paying them back along with trying to take care of your living expenses. Keep track of your total amount and make a plan to pay them back and stick to it!
Marpessa Oliver writes nssfns.org