Aspirations are an indicator of your liveliness. Every youth wants to fulfil his/her aspirations to live a lavish lifestyle with all the amenities and accessories in place. Many choose the path of a professional career to make their aspirations true but face the dearth of money to pursue their degrees. In such a case, any meritorious student should first do a thorough research on the financial aids provided by government and other educational organization.

A deep research and handful of efforts may lead you to grab a coveted scholarship and saves thousands of dollars but if not eligible for any- then taking student loan is the only option left in front of students.

However, student loan option is also considered as good but many stakeholders do not know the nitty-gritty associated with it. It is thus very important to know some of the interesting facts before applying for an application towards your first education loan.

Choose Among a Federal or Private Loan

Any student can take either a federal loan or a private loan. A federal loan is directly funded by government and comes up in two categories- subsidised and un-subsidised form. Subsidised student loans are reserved for certain categories of students, and the government pays the interest while a student is in school. On the other hand, un-subsidised loans are available to all students no matter what their socio-economic backgrounds are. However, in un-subsidised loans, students have to pay their interest on their own. Many also knock the door of private lender to get necessary funds for education. Research says: ability to restructure payment options and fixed interest rates allure many towards federal loan while lower interest rates (in some cases) provided by private lenders attract many towards private loan. However, it is always better to look out for a federal student loan first before moving towards private ones.

Choosing the Loan Tenure

It is one of the most vital decisions in the loan application process which students have to take. As for how much time you are setting the loan to get clear decides how much extra you are going to pay to your lender. If the duration of loan is shorter then you have to pay big EMIs but your loan will get cleared in shorter time and you will end up paying less interest. Contrary to this, if you choose a longer tenure, then you have to pay less per month but at the end of your loan- you will have paid much more interest to your lender.

Both options provide unique benefits to the students. But if you are very much sure about getting a handsome salary package within a promising and lucrative career field with no extra financial responsibilities on your shoulders, then picking the lesser tenure loan gives you advantage, otherwise the latter one also works best for you.

Know the Grace Period

Not all students pursue the same course. Not all get placed in the blue-chip companies. Not all get the same salary as their peers. And most importantly, not all get job at the same time. It is thus very important to find a lender that offers a required grace period to start your first payment. Every bank has different set of rules and regulations including grace period. Therefore, it is vital to check the exact time required to find an employment after your graduation and depending upon that only choose a lender that gives you decent grace period. Otherwise, it may happen that you are still searching for a job and your lender sends you the first demand letter towards your re-payment. It then not only creates an embarrassing situation for you but also increases the anxiety which can further trouble you in finding employment in the right time.

Deferment or Forbearance can help you in Need

There are some circumstances occurs even after starting the repayment where a student’s financial condition does not encourage him/her to pay the next instalment. In some genuine cases that too depends upon the type of loan, lender and certain eligibility criteria- a student can utilize deferment or forbearance to stop making his/her federal loan payment for some time or temporarily reduce the amount of his/her federal loan payments for some time. Stopping or reducing the payment amount thus helps a student to avoid default in the times of need.

However, one can ask their loan manager about their eligibility for availing this benefit, but one thing any student must take care of is the repayment of their outstanding amount on timely basis until the deferment or forbearance is in place. A prior payment default may reduce your chances of utilizing this benefit.

Loan Forgiveness

What if your loan gets forgiven by your lender? Won’t that be great! Many lenders also give the option of loan forgiveness to candidates who meet certain requirements. Forgiveness requires that a student should continue job in the public sector with government organizations, not-for-profit organizations, law enforcement agencies, teaching and military services among many more.

Bankruptcy

Contrary, in most cases, student loans cannot be dissolved due to bankruptcy. It is there with student till the payment of all outstanding amounts. If any student stops paying his/her instalment on time the government has the authority to directly deduct the amount from your salary in order to pay your debt.

Therefore, it is best to take only that amount of loan which you are capable to re-pay based on your real-life facts and endurance.

— Ashwini Deshmukh