Are Student Loans Really Worth It?

There is no getting way from the fact that education is expensive. Student loans have become the popular way to access funds in order to enjoy higher education. Indeed, around 45 million borrowers exist in order to earn their degree, meaning $1.6 trillion has been paid out for student loans across the country.

But you may be wondering; are student loans really worth it? Do they offer a lot of advantages over private loans? The answer is yes. In particular, federal student loans offer a host of benefits for those that want to enjoy higher education.

You Can Pay for College

The average cost to attend university in the United States stands at $32,782. Simply, this is a lot of money that many people do not have. Student loans allow for access to money in order to get an education and increase the chances of finding a good job. They can be the difference between somebody attending college and university of not. Not every student will be awarded a scholarship or grant.

In addition to tuition fees, there is also the cost of accommodation and living expenses to think about. Again, student loans allow you to avoid spiralling up more demanding forms of debt.

https://pixabay.com/photos/mentor-school-students-college-3512369/

 

Lower Interest Rates

You will find that federal student loans are designed to be easier for people in education. This means having lower interest rates than private loans. In addition, another advantage is that this interest will be fixed for the duration of the loan. So, you do not have to worry about it increasing.

There are also elements that can help you enjoy lower interest rates on a student loan. For example, if you already have a good credit history, this can work in your favor. This same principle can apply to federal and private loans. You can find more information on APR here.

Repayment Grace Period

For federal student loans, you can enjoy a long grace period for repayment. This means you have time after you graduate or leave school before you have to start to pay back your student loan. Depending on the loan you choose, this can be around six to nine months. This time can allow you to find a stable job and make the repayments comfortably. Just be aware that interest normally accrues on your student loan during this grace period. This is something you will need to remember and budget for.

Good Credit is Not Necessary

Having a good credit history is something that is essential to enjoy a large loan, as well as good interest on that sum of money. But the good news is that this is something that is not essential for a student loan. As long as you are an enrolled undergraduate, you can be offered a federal student loan. Often, they will not consider your credit history when they are awarding you a loan for higher education. It will only be if you are considering a private student loan where your credit history is going to matter.

In addition, a student loan is a great opportunity for you to build a good credit history. For a lot of young people, this is the first big financial transaction they are involved in. This means it is a good way to build credit for taking out loans later on if you have a short credit history. Just make sure that you may repayments so that it does not affect your credit score.

No Need for a Co-Signer

One way of getting around not having a credit history is to have a co-signer. This means that they take on the responsibility of paying the loan if you cannot do this. But with federal loans, there is no need to find a co-signer. You do not have to ask a member of family to support you financially. Since federal loans doo not depend on your credit history, they normally do not need a co-signer. Only if you want to take out a private student loan will this be something you have to think about.

More Time Before Default

When you miss a payment on a private student loan, you are going to go into default. As a consequence, you will fall into trouble and this is also going to damage your credit history. Yet, federal loans do not work like this. They will give you more time if you miss a repayment. This allows you to get back on your feet if you fall behind. You will not be reported until you miss three months of payments. This gives you more time before default, which could be all you need to recover from the bad time you are going through. You will go into default around nine months from the missed payment.

Share this post:

Leave a Comment