College loans should only be used to supplement other financial aid programs. Federally backed college loans offer good terms, but students should be cautious about accumulating too much debt before securing a job. Borrow only what is necessary and consider budgeting and work/study programs to avoid excessive debt.
There is no doubt that earning a college degree can be one of the most expensive investments a person will make in their lifetime. Tuition, room, and board at major public or private universities can easily run into the thousands of dollars per semester, and most degree programs require at least eight full semesters of study to earn a Bachelor of Science or Bachelor of Science degree. Art. Graduate degrees usually require at least two more years of study, and medical schools often require even more course work. Considering the limitations of financial aid programs, taking out college loans may seem like the best way to finance higher education, but many financial experts urge caution before taking on too much personal debt at an early age.
One thing many financial experts agree on is that college loans, whether private or federal, should only be used to supplement other forms of financial aid, such as Pell grants, scholarships, and work/study programs. Many of these programs are designed to meet all or most of students’ tuition, books, and basic living expenses during college. College loans are intended to bridge the gap between tuition and actual expenses, primarily food, transportation, and other personal needs not covered by endowments and scholarships. Unlike other forms of financial aid, however, these college loans are to be repaid upon graduation or voluntary withdrawal from college. A student may have to start paying off college loans as early as six months after leaving an institution of higher learning, regardless of whether they earned a degree or landed an entry-level job.
So should you take out college loans to fund your own higher education plans? This usually depends on how much money is still available after other financial aid programs have been applied to your essential college expenses like tuition and books. Some students find that by carefully budgeting their remaining cash and taking advantage of work/study programs or off-campus employment, they don’t really need loans to meet their personal needs. Others, especially those who attend expensive private colleges, may find that other financial aid programs don’t provide enough money to meet their school obligations, so college loans become a necessity rather than a luxury.
As far as personal loans go, federally backed college loans offer some of the best terms available. Interest rates on college loans are generally lower than other financial loans, and borrowers who find themselves unable to make payments have several options for deferrals and forbearance. A student deemed financially independent by financial aid standards can borrow thousands of dollars through college loans with a minimal credit rating and little collateral. If you need additional cash to support yourself while attending college, taking out college loans is a fairly easy way to eliminate financial stress while you focus on your studies.
One of the problems with taking out college loans, however, is accumulating substantial personal debt before you’ve even secured an entry-level position in your field of interest. A student studying college at a large university can easily take out thousands of dollars in college loans over a four-year period and forget that all that money is a loan, not a grant. When the student graduates, he or she may receive a substantial loan payment bill and still not have a large enough income to make a full payment. If you’re considering taking a course with a low starting salary, like social work or the liberal arts, reconsider your need for college loans. At a minimum, borrow only the minimum amount necessary to keep your mind and body together.
College loans are a good idea as long as they complement other financial aid programs. Depending on the cost of tuition, federally guaranteed college loans may even be a necessity for some students. Taking out private college loans should only be done after examining all other options. College life should be filled with social and entertainment experiences not found in the classroom, but it should also be a time to learn about adult financial responsibilities and the benefits of living on a budget. College loans should only be taken out after all other financial options have been exhausted, as repaying them can take up a large chunk of an adult’s budget every month.
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