Student Loan Tips For Recent Graduates

And now for the moment you have probably been waiting for — the loan directory! This chapter will be a hands on and detailed look at each common type of loan, which will help YOU decide which kind of loan you need and what the differences are between them. I encourage you to print this section and refer to it whenever you need to. Let’s dive in and take a closer look at each type of loan:

What are they used for? — Student loans are for anyone going into college. This applies to all students, regardless of age. Students who decide to go back to school later in life are just as eligible for student loans as those who go straight to college from high school. College and university tuition is incredibly expensive the in the United States, and most of us do not have the luxury of paying for education out of pocket. With school tuitions averaging between $40,000-$80,000 and often MUCH more per year, it is easy to understand why almost every student relies on at least one loan.

Loan conditions — So, what will you need in order to get a student loan? Most lenders will require proof that you actually need a loan. That includes showing proof that you are enrolled in college, which means notarized proof FROM the college with the school letterhead. That could be a copy of your class schedule, or any other documentation that proves that you are a student at the school. The same principles are applied at any country including the Money Lender Singapore

In addition to proof that you are a student, you will usually need to prove that you do not have the means to pay for school on your own without help. This means that you will need to show proof of your yearly household income. If you are a young student and still qualify as a dependent on your parents’ tax forms, then your parents’ income will need to be shown. If you are a dependent and will be putting yourself through school, then your own income will need to be shown.

Essentially, these lenders want to make sure that even if you cannot pay for school out of your own pocket, that you DO have the means to pay it back — eventually.

Where can I get it? — Thankfully, student loans are plentiful! They are accessible and lenders make themselves available in many ways because they know that students rely on them. Unlike regular loans, student loans can come from a variety of places INCLUDING your school! Often times, the institution will lend you money in order for you to come to their school. Sounds strange, doesn’t it?

Well, think of it from the school’s perspective. Colleges and universities, in addition to being educational establishments, are also businesses. They need to profit in order to cover their expenses, and they would not be able to do that if they simply gave money away right and left.

However, since they need you to come to their school in order to get your money, they are often willing to lend you money in order to get it back in the future. So, what are the conditions of that? There is still a grace period, and university loan grace periods are usually six months.

This can be tough — the school gives you only six months from the time that you graduate to find a job and start paying them

back. Six months may seem like a long time, but it is much harder to find a job than it used to be ESPECIALLY for new graduates. Remember that student loans are not any different than regular loans in terms of grace periods or expected repayments, however they are willing to be a bit more flexible with their students in terms of plans and will allow you a fairly low monthly payment plan. You can also get loans for school through your bank, or through private lenders who specialize in school loans such as Perkins, Stafford, SallieMae, or dozens of others. Always remember to shop around for what is best for YOU!

Example 1 A student takes out a loan for $6,000 with a 6.8% APR (interest rate) and the standard 10-year payment plan. Over 10 years, making monthly payments, you will be making approximately 120 payments. The minimum monthly payment you must make is $69.05. $69.05 x 120 = $8,286.69. That’s a whopping $2,285.69 in interest, meaning return

of $1.38 for each $1 borrowed. Of course, if you choose to make larger monthly payments than the required minimum you can shave some months off of your schedule and cut down on the accumulated interest.

Example 2 A student takes out a loan with another lender for $8,000 with 5% APR and 2% loan fees, with the standard 10-year payment plan. The first thing we need to do is adjust the loan amount for the loan fees. After adding 2% loan fees, the total loan amount comes to $8,163.27. Once again, 10 years with monthly payments equals 120 payments, meaning your monthly minimum payment must be at LEAST $86.58. $86.58 x 120 = $10,389.60. Therefore, you end up paying an extra $2,390.24 in interest over 10 years. If you extend the payment period to 15 years, your interest jumps to $3,620.83.

Can you see the benefit of paying off your loans as quickly as possible?

Author: Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles by others on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to editor.webposts@gmail.com