Before starting, I first want to fully disclose my own student loans. In order to attend college and live on-campus, I had to take student loans, which mostly covered housing and a full meal plan.
Now to start, the realities of student loan debt. There is a reason why the title mentions
realities not
reality. Every person has a different experience with student loans. The basics are still the same, but how each person interacts with them changes.
These are some of the topics I believe are worth mentioning in order for you to make the most out of your student loans.
1. Pros & Cons of Private and Federal Loans
Personally, I have never taken a private loan because I think the cons outweigh the pros. On the positive side, in most cases, you get to pay less interest and the application process works very quickly; for some of them you can apply and get approved within a few minutes. You do need good credit and most likely will need to co-sign with another person. They also don’t help you much if you can’t pay them after graduation.
All the loans I have taken are federal loans. The pros are that after college, if you can’t pay your student loans, they let you pay the minimum for a certain period of time. They also let you take 100% of your tuition, fees, housing and meal plan. There are different types of federal student loans you should read about more extensively, but overall, I think federal loans are better. For example, if you take a Direct Subsidized Loan, the government pays for the interest while you are in college. The con of having a Federal Loan is that they can literally take your paid wage from you if you don’t pay your loans on time.
2. Are They Worth It?
Not all majors are created equal. There are majors which starting salary is $20,000, but with other majors, it can be more than $40,000. Simple rule: don’t take out loans you know you will not be able to pay back. Students from liberal arts majors can earn more than stem majors if they have more experience, better grades and connections, but for the majority, that is usually not the case. This is something you really need to think about before signing on the dotted line. I personally know people who did not go to college because they did not want to get into debt.
3. Compare Student Loans for Public or Private Universities
Many differences take place between public and private universities; student size, professor – student ratio, amenities, location, among others. The reality is that private universities usually look better in your academic transcript and they have nicer facilities with fewer students in each class, but is getting further into debt in order to go to a private university worth it?
You should definitely look at public universities too. The SUNY and CUNY programs have great universities in every size all over New York State. Every state has different programs to help you get the most out of your education without drowning yourself in debt.
4. Paying Off the Interest
Pay the interest while you are a student. Instead of wasting money partying or get together, pay the interest. According to many resources, you will thank yourself after graduating. Instead of spending the first years after graduating paying off the interest, you will pay off the principal balance - the amount you actually borrowed - plus some fees you unfortunately can’t escape.
5. Pros & Cons of Having Student Loans
Pros of having student loans: They will help you succeed in life. They help you get an education that will further your knowledge and experience in real life. You get to meet new people, maybe even live on campus for a few years, and make work connections that will further your career more than anything else.
Cons of having loans: Interest. You pay interest once those loans go to into the school, another small interest every month while you are a student, and more interest every month after you finish college. It may also stop you from living the life you desire after college if you want to pay them off right away.
Don’t worry much about your student loans while you are in school. Of course, it is highly recommended that you pay the interest while in school, but don’t stress that much about it because it will take your mind out of more important things, like homework and club activities. Take more care with achieving college success: your grades, your clubs, and your work. In reality, a lot of people, probably millions would not be in college without student loans.
Best advice I can give you: Use them wisely. Just because you can have college loans does not means you should; do not take out more loans than you need to, it will not be worth it. Having the federal government or private lender give you extra money may seem like the best thing ever, but once you pay it back, you will pay the double or even three times as much as they gave you that one time.
