What to Consider When Applying for Federal Student Loans

The Advantages of Federal Student Loans

All loans come with an attachment; they are expected to be paid back in a timely manner and they come with an interest rate on repayment. Federal student loans generally have lower interest rates than the loans you can receive from a financial institution or other private lenders. They also have more flexible repayment options. You will not have to begin paying a federal loan until you graduate, leave school or change your enrollment status to less than half-time. Federal loans can help you establish credit, you do not generally need a co-signer to receive a federal student loan, and in some cases, your interest rate is tax deductible. You may receive a certain amount of loan forgiveness, if you work for public services. However, before taking out a federal student loan, there are some things you should consider.

Do the Paper Work

Taking out a loan comes with a certain degree of responsibility. Keep a record of how much you’re borrowing for future references. Consider the salary you can expect upon graduation. Your loan should not be so much; it will be difficult to pay it back once you join the work force. You can check with the U.S. Department of Labor’s Occupational Outlook Handbook to get a good estimate of the salary you will likely begin receiving for the type of career you’ve chosen.

Understand the Terms of the Loan

When you sign the loan documents, you are agreeing to pay back according to the terms of the agreement. Your loan will not be nullified for not finishing your education, are unable to get a job in your field of choice upon graduation, or you weren’t satisfied with your education. You’ve made a promise of repayment and you are obligated to make good on your promise, no matter what your personal circumstances might be.

The Credible Borrower

Repaying your student loan helps build your reputation as a credible borrower. Make your payments on time even if you did not receive a payment notice or reminder. Do not make a partial payment. If you are having financial difficulties, notify your loan officer. You may be able to arrange for adjusted payments that will help you keep your record as a good borrower satisfactory.

Before receiving your federal student loan, you must complete entrance counseling to ensure you understand the obligations entailed in securing a loan. You will sign a Master Promissory Note agreeing to the terms of the loan. Contact the financial aid department at the school you are attending for details on completing the loan process.