Knowledge is power. Use it wisely.
The greatest percentage of students heading off to college or university will need financial assistance in the form of a student loan. While you may think that going with the lender suggested by your school of choice may seem like the easiest route to go, it likely won’t be the smartest. Why? Chances are, the school is being paid some sort of commission by the lender. Why should that money go in their well padded pockets instead of coming off of your bottom line?
So, before you burden yourself with unnecessary student loan debt, take some time and do your due diligence. First, assess how much money you’ll need. Are food and living expenses included in your tuition? What about textbooks? Transportation or medical expenses? Once you’ve done that, use this loan calculator if you’re in the U.S. and this one if you’re in Canada.
Okay, now you know how much your student loan should be. What next? You need to choose between a federal or private loan. The info on that page will provide you much more detail than the brief synopsis that follows on this page.
For those of you who already have a basic knowledge of the subject, feel free to skip the first bit. It will likely be redundant, and is here only for those who don’t have a basic knowledge!
Your loan choices, whether you are in the United States or Canada, are either a federal or private loan. The federal loan is backed by the government, the private one isn’t. You don’t need to worry about your credit score if you are going the federal route, you do if you want a private loan. Regardless, there are still eligibility issues, either way you go.
In the United States, most students go for the Stafford Loan, to which students of all income levels are welcome. However, those in the lower income bracket qualify for a subsidized option. Those students of extremely low incomes would apply for a Perkins loan.
In Canada, loans are handled at the provincial level, so all things are not equal. Regardless, the guidelines on who can apply are fairly strict and convoluted. Eligibility depends on, but is not limited to, your income, your parent’s income, retirement savings (RRSPs) that may be in your name, and so on.
How about private student loans? Well, you’ll likely be able to get a larger loan, but you’ll need a decent credit score, or family members with a good score who are willing to co-sign. As well, generally speaking, there is a longer repayment term when you go with a private lender.
There are other issues in which I’ll go into further detail on the following pages. What to do if you have bad credit. Is there a way to refinance your loan? Want to learn more about student loan debt consolidation, repayment programs, deferment, or forgiveness of student loan debt?
Whether you are in the United States or Canada, and whether you are applying for a government or private loan, you can do much of the work online. You can find what interest rates are being offered and even submit your application from your laptop/desktop.