Student Loans Jack Seeto

What are Student Loans?

A loan is money that is borrowed and expected to be payed back by students

Types of Loans

Subsidized- the federal government will occasionally pay for the interest of the loan.

Unsubsidized- the student pays for the interest on top of the amount they are borrowing.

Who do you borrow from?

Federal loans are funded by the government and usually offer low interest rates and flexible repayment options.

Private loans can be taken out from a bank or school. These are usually higher interest rates and less flexible payment options.

Only take out what you need to borrow otherwise you could be sacrificing scholarships and other grants that may not have to be paid back.

Understanding your payments

Timeline- Analyze the amount of money that needs to get paid off in order to complete your loan payments. Then set a goal for how long you want to spend time doing this. Paying off loans faster means saving less money but reduces the amount you will have to pay in interest.

Monthly payments- Understand how much you will be paying each month. These payments can be adjusted based on your income.

Total amount- Know the total amount that you will have to pay over time.

Interest rates (fixed/variable)- Some loans will have fixed interest rates. This means that the interest rate will remain the same over time. However some loans have variable interest rates, in which case the percent that is charged can increase or decrease. This is something to be cautious about that one should research before taking out loans.

Understanding payments guideline- Always read the fine print or any documents fully before signing. You want to know were your money is going and why.

Paying back loans

Work study at school is a great way to earn some type of income while you are at college. Every little bit will help.

Internships will not only help you gain real world experience, but some may also pay a decent amount for doing so. This is a great way to get two things done at the same time. Part time jobs during the summer or even during school is also a good way to earn money.

Study the stock market/investment options, as well as other ways to boost your finances. Although these methods are more risky, when done correctly they can help you significantly in the long run.

Timing

Work hard in college to get a prime job when you get out. Coming out of school with a good job will help you pay off loans faster.

Start paying immediately do not procrastinate. The faster you pay off loans, the less interest you will have to pay.

If affordable, pay multiple payments per month or increase payments to reduce interest levels.

Pay off higher interest rate loans first. That way the loans with higher interest rates don't build up for as long of a time.

Live Below Minimum

Don’t develop other debt (credit card balances, car payments) Staying out of debt in other places will help you financially and mentally. Otherwise it is just one more thing to worry about.

Look for cheap places to live, you may not need the apartment complex with a pool, gym, and five star restaurant. Location is also important here. Don’t necessarily take jobs in NY, LA, Chicago. Research the cost of living for multiple job locations.

Cut back on unnecessary spending. This could be everything from phone plans, cable, food, car payments, vacations and other luxurious purchases.

Budget your weekly spending. Give yourself a set amount of money and stick to it.

Negotiation

Learn to negotiate everything (interest rates, salary, signing bonus, relocation)

Look for deals and sales on these things as well. Live like your cheap.

Manage Your Loans

If you are unable to make your payments, don’t panic, you can renegotiate your payments to less, it will just take you more time.

Deferring- A deferment or forbearance allows you to temporarily postpone making your federal student loan payments or to temporarily reduce the amount you pay. However you must qualify for a deferment or forbearance.

Prepare

Understand tuition prices going in to college. If a school is way out of your cost range and you are paying without help, you might want to reconsider your options.

Evaluate your financial aid package and scholarships.

Apply for more scholarships.

Work in high school, mow lawns/ yard sale.

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