Banks usually provide customized loan services to trustworthy customers.
Unlike payday loans, getting a bank loan is pretty tricky and complicated. Still, when you maintain a good credit rating, banks consider your creditworthiness and offer you the loan quickly.
However, this does not add any value when it comes to a student loan.
How Do Student Loans Work?
In major American and European countries, students are enjoying free education until they complete their high school. Nevertheless, things change drastically when they complete their schoolings.
Expenses for university and graduate schools are not covered by the government. And the expense is not a mere amount rather a real nightmare figure. Most people cannot afford to pay for the cost of higher studies out of their savings or income.
For those people, student loans are a really good option to avoid problems down on the road.
In the first place, you need to understand what the student loan is meant for and for what purpose you need to use the student loan
Pay For Tuition Fees
You can get up to $40,000 to help cover your post-secondary education costs.
The basic qualification for getting the student loan is, you should attend any accredited university, community college, trade or vocational schools. It is immaterial what degree are you pursuing rather depends only on the institution.
Student loans are not only meant to pay for the education cost rather involves living expenses. When you live in a student hostel or an off-campus apartment, you can make use of the student loan to pay for your accommodation.
One of the main advantages of student loan is, it need not be repaid until a few months after graduation. Therefore this is very much useful in meeting their financial needs.
In many regions living off-campus works out to be cheaper than living inside the campus, so the student often prefers to hire accommodation outside the college campus.
However, the problem involved in renting off-campus is commuting. Apparently, student loans cover all the travel and miscellaneous expenses.
For example, the cost involved commuting to the university like the public transit fares, purchase a bus pass, gas expenses, parking pass and to fund other types of transportation you need.
In addition, it also includes the flight fare to commute to home during vacations and long breaks.
Meal plans are pretty expensive in colleges, although you prefer to go for the basic meal plan yet on an average, you should be prepared to spend about 7 to 10 dollars a day which is not affordable for the students.
However, the student loan covers the meal plan and other food expenses that the students use on the campus.
Purchase School Supplies
The typical cost of the graduate school textbook is around 200 to 400 dollars. Managing the cost of the textbook is not a fairly easy option.
Apparently, student loan provides them with an opportunity of buying textbooks when you cannot afford to spend from your pocket.
The most fortunate thing is, both federal and private loans can be used to cover textbook purchases.
But there are few things that are found prohibitive to be utilized with student loans. The office of federation student aid states that student loans should be used to cover the above-said expenses.
However, many people knowing the fact that nobody is watching their bank account to track down the expenses made with a student loan, they have started misusing the loans. Let us list a few things which should not be used with student loans:
- Partying with friends
- Buying accessories for your student room
Although it is a smart and wise decision of the parent and student to take an insignificant debt to earn an academic degree, yet there are few things to be considered before you take a student loan
What Should You Know Before Taking A Student Loan?
- The loan you choose should be either private or federal- While different loans come with different terms and conditions, student loans comes only as a private loan or federal loan. Private loans are ones that are provided by individual companies or banks however federal loans are the ones funded directly by the government at a relative better interest rate
- Understand the terms of payment. If you agree for shorter repayment time, your principal will be higher however for the longer repayment time it is the vice versa.
- Make sure you know about the duration of the grace period
- The final thought is to determine whether you will require the loan.
The main worry of every parent when the child enters the college is the financial aid.
College fees have become an expensive affair, however, if you can manage the expenses without the loan, it is great but when it is not manageable, make use of the student loan and meet your child’s need.