Taking out a student loan can give you the security of being able to earn your college degree without worrying that the rising cost of tuition can eventually force you to stop and not finish. But as with any type of loan, there are certain risks that are connected to taking out a student loan. If you’re not careful, these risks can lead to a lot of problems in the near future.
Of course, there is nothing wrong about considering to apply for a student loan, especially if you really want to go to college but you just don’t have the funds to cover all of the expenses you’ll have. However, it’s very important to make sure to carefully study this option to see if this is truly your best one.
Here are three major things to consider and look into before you go out and apply for a student loan.
Checking other options
Before you go out and apply for a student loan, make sure that you’ve thoroughly exhausted all your other options.
One alternative is to earn your college degree through online learning. The tuition costs of online courses are considerably lower than taking the same course on-campus, mainly because there are several expenses tied to earning a college degree on-campus that are not applicable to you when you take the same course online.
Level of passion for your course
You may be thinking, “what does this has to do with taking out a student loan?”. Believe it or not, your willingness to complete your college degree to the very end plays such a huge role when it comes to taking out a student loan.
For starters, the college degree that you choose will dictate how much you can loan to cover your expenses and how much you will need to pay back. If for some reason you decide that the course you’ve chosen is not really what you want, and opt to take another course, there is always that possibility that not all of the units you’ve taken will be credited to your current course, forcing you to extend the length of time it takes before you graduate. The longer you stay, the more expenses you incur, increasing your student loan amount. Naturally, the higher the student loan amount, the higher the loan repayment amount you’ll need to settle immediately after you graduate.
Also, it’s important to point out that you will still need to pay back your student loan even if you don’t finish school. Lots of students think that they don’t need to pay back their loan if they drop out of school. In reality, you are required to pay off the loan even if you don’t have a diploma or a certificate to show.
Your ability to pay back your student loan
Generally speaking, you will be required to start paying back your student loan after you graduate. That being the case, you need to make sure the loan repayment amount should be no higher than 15% of the average salary you are likely to receive once you get employed, according to Edvisors’ Senior Vice-President Mark Kantrowitz. If the loan repayment amount is higher than this, you can almost be assured that you will be struggling with paying your student loan back.