Student loans have recently become ubiquitous in the world of college education. Not many years ago, those students who did go to college were able to finance their educations through savings. Now, though, higher education is required for nearly every job in the adult world. Because of this, more people are going to college. As costs rise, it’s impossible for most students to graduate debt free. Thus, the student loan helps many people get to college, only to become a millstone around the neck after graduation. Here are a few things you need to know that can save you from problems with private and government school loans in the future.
1. Government loans can be consolidated easily, but private loans can’t be. Consolidating your loans can be helpful, especially if you have two or three separate government loans for each year of college. You can have one payment each month, and you may also be able to lock in a low interest rate. If you had to take out supplementary private loans, you’ll have to pay them separately.
2. If you have no money, you can put off paying off your government loans. You won’t have to start paying on government loans until a few months after graduation. If you can’t find a job or don’t make enough money to make ends meet, you can probably get forbearance on your student loans, which means you don’t make payments for a while. They still accrue interest, though!
3. Student loans are pretty much not forgivable! Even if you file for bankruptcy in the future, your student loans won’t be forgiven. They’ll only disappear if you are permanently disabled. If you can’t make your payments, don’t just stop paying and assume it will go away. Those loans will still gather interest, compounding your problem immensely.
4. You can become responsible for another person’s student loans in a few ways. If you cosign on a government loan for your child, spouse, or other friend or relative, you’re responsible if they don’t pay it back. Also, spouses can consolidate their loans together, but this makes each spouse liable for the other’s loan in case that spouse dies.
5. Student loans do affect your credit, but not as much as other loans. Since these loans are everywhere, they aren’t considered bad debt by the credit companies. However, if your payments take too much of your income each month, you may be unable to get a mortgage or even a car loan.