Student Loans for College and Higher Education

If you are applying for a student loan for the first time, or even the second time, I would like to offer you my view on the process. When I was in college (which wasn't that long ago) and started applying for student loans, I had no one with experience to depend on or ask question of, and I am still "paying" the price. I was desperate for a loan since I received very little financial aid. I had exceeded my allowed amounts on my Stafford Loans, both subsidized and unsubsidized. So I went in search of the dreaded student loan. All that I could find was a loan from a private bank, so I signed the papers. What choice did I have right?

Then the next year I was again maxed on my Stafford Loans and still needed more money. The only way I could get a loan now was to have my parents co-sign, so they did. This cycle repeated itself for 4 years. After graduation, I now had six months before repayment started. When the bills came it was like a flood. I ended up with six student loan payments to the tune of $32,000! I panicked, how was I ever going to pay over $650 a month in student loans? I called and asked about consolidation. This is where the student loan "game" gets tricky. When I signed all of those loan papers I was told repeatedly "you can always consolidate after graduation". This was far from the complete truth. I was unable to consolidate any private and public (Stafford Loan) loans, I was unable to consolidate any loan my parents co-signed on with one they did not co-sign on, and I was unable to consolidate private loans from different banks. After it was all said and done I was able to consolidate down to three, which believe me was much better than six. So parents, do your kids a favor, if you are willing to co-sign on one, then please for their sake, co-sign on all! Avoid private loans if at all possible, or if you are unable to, use all private loans from the same bank. Another tip they do not tell you, read the fine print of the loan agreement. My father ended up disabled and because he co-signed on one loan I didn't have to repay it. I called the bank and they forgave the loan in its entirety!

Now for payback options. There are many, which are agreed to upon signing the loan papers. Again, read that fine print! Some loans offer a graduated repayment plan. This is based on the idea that when you first graduate and get a job you may not be making alot of money. But as the years go by, your salary will increase. So you start out with a small monthly payment and every few years the payment will increase. This is a very nice option to have. Student loans also offer deferments. This means you don't have to pay now, but the interest continues to accrue and your balance owed will increase. You can only do this for so long, then you must make payments. My advice is do not defer your loans unless you absolutely have to. Use it for emergencies such as unexpected unemployment. Once your allotted deferment time is over, you have no option but to pay. The loan companies do not care about your current situation at that point. Student loans offer forbearance. This means while you are in school, for however long that is, you do not have to make payments. If you graduate then decide to go back and get your Masters Degree, put them loans into forbearance.

To sum up, read the loan papers thoroughly, ask questions about consolidation options, and stay with one loan company. Making those monthly student loan payments is exhausting. It will be one of the bills you will pay the longest in your life, right behind the mortgage on your home. But then the last coupon book comes and you start the count down. Now that I have shared this with you, I must go write that LAST check out to one of my student loan companies!