With graduation comes the promise of new beginnings, big and small. Students are planning summer trips, planning graduation parties and getting ready to go off to college. Funding this new road often requires graduates and their families to become creative with their finances. While scholarships, grants and funds from a summer job might help to ease some of the burden, often graduates need to apply for student loans to cover the remaining balance.
Types of Loans
While financial aid is generally lumped into the all-inclusive description “student loans,” there are actually several different options. For the most part they are divided into federal and private loans. Federal loans typically have lower interest rates and offer several repayment options; however, there is a limit to the amount of money that can be borrowed depending upon the grade level the student is in school.
Many times after scholarships, grants and federal loans, students still have a deficit which requires them to apply for private loans to cover the balance. Private loans come from individual lenders and require a credit check for approval. These loans have a variety of different interest rates and limited repayment options.
Once college graduation occurs, loan providers typically provide a six-month grace period before repayment starts. It is important to get organized during this period to ensure you are prepared to start payments. If you have several different loans, talk to your loan service providers about specific repayment options and determine the best plan for your financial picture. Additionally, consider setting-up auto payments so that you don’t have to keep track of multiple payments. Some private lenders might also lower your interest rate if you choose this option.
Depending upon your career choice, you might have a federal loan forgiveness built into your employment. This means that all or some of your loan might be canceled if you stay with the employer for a certain period of time. Volunteering for organizations such as the Peace Corps or AmeriCorps, working as a non-profit attorney, or starting a career as a teacher or medical professional are some examples of post-college paths that might offer this benefit.
If you are a recent graduate, contact the professionals at Fairmont Federal Credit Union to discuss your student loan options.