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Taking Student Loans Seriously

With the rising costs of higher education, more people are turning to student loans to pay for their education. If you still need money to cover educational expenses after you have exhausted other aid and employment opportunities, student loans are a good option. Just remember, student loan money is for financing your education, not your lifestyle. Student loans are real money that must be repaid, with interest, so borrow only what you need.

The first step to taking student loans seriously is to determine an appropriate amount for you to borrow. You'll want to consider the career path you plan to follow and your eventual income. There are calculators available that can help you determine the percentage of student loans to your eventual income.

The next step is to do your own research to determine the best type of loan for your situation. There are many different education loans available through federal and private sources. When deciding which loan options are best for you, keep in mind that federal loans are usually less expensive, have more deferment and forbearance options available to postpone payments and have loan forgiveness opportunities not available through private loan programs. Private loans are best used as a last resort to help finance any gap that is remaining after family resources, scholarships, grants, institutional aid, student employment and federal loans have been exhausted. You'll also want to think about which lender can provide these loans at the best price. Not all student loans are the same. Having the right lender may save you thousands of dollars over the life of the loan. Each type of federal loan, plus links to their descriptions, can be found in the Federal Loan Programs section of Financial Aid 101 on the Financial Aid Planning tab above.

Taking your student loans seriously and establishing a good repayment history will open financial doors for you. Repaying your student loans can help you establish a good credit rating! You will demonstrate that you are capable of handling a large amount of money, so when you go to buy a house or a car, lenders will want to finance you at favorable rates. You will also avoid legal action from your guarantor, high collection fees, seizure of your income tax refunds, wage garnishment, or exclusion from financial aid and other government assistance that could be critical to you in the future.


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OCAP believes that financial literacy and understanding the financial aid process are critical aspects of college planning and student success. OCAP staff who work with students, parents, educators and community partners in the areas of personal finance education, state and federal financial aid, and student loan management do not provide financial, investment, legal, and/or tax advice. This website and all information provided is for general educational purposes only, and is not intended to be construed as financial, investment, legal, and/or tax advice.