Being in college is fun due to interacting with diverse people. It can, however, be challenging when it comes to finances. There are all kinds of expenses you need to think about including fees, accommodation, food or even transport. That is why a lot of students consider taking loans.
Financial institutions offer personal loans for students to facilitate the learning process. Though it helps, you should think twice before applying for a personal loan. These loans are not made equally, and they can cause problems in the future. Most people who take personal loans during college end up wishing they did not, late in life.
Though personal help students, they have quick terms of repayment. The lender of your personal loan can start asking for payments as soon as you graduate. Most of them have repayment terms that range between a year and seven years. This is a short period since they is no guarantee that you will secure a job immediately after school. Even if you do, you may not earn enough to afford payments that soon.
Personal loans are different from federal student loans when it comes to the repayment plan. Instead of applying for a personal loan, consider a federal loan which comes with a repayment plan of up to 10 years. This gives you enough time to plan your finances and repay the loan without pressure.
Another issue with personal loans is that there is that you don’t get help to make repayments. This is different from applying for a federal loan since the loan provides you with various options to help you make quick repayments. Federal loans offer options such as consolidation, forbearance, and deferment.
The interest rates of personal loans are also high since they are unsecured. The lender does not ask for any collateral, so they raise the interest rates to ensure that you pay the loan back. The rates vary as per your credit score. A high rating means low-interest rates for the borrower. Instead of risking accruing high-interest rates from a personal loan, you can apply for a federal loan which is cheaper to make payments. Your creditworthiness does not determine the federal rates.
Apart from federal loans, there are also other alternatives to personal loans. You can apply for a scholarship or grant. This can help you acquire free money which you are not expected to repay. Different programs offer aid in the form of a scholarship to college students. Some grants are also state-specific therefore look for the ones within your state.
Your family and other relatives can also help you during financial problems in college. Talk to your relatives to help you raise fees and cater for other expenses. You can even get a small family loan and pay it back during long holidays when you secure small jobs. If you can survive college years without applying for a personal loan, you would save yourself problems in the future. Let a personal loan be your last resort after exploring all the possible options.