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Four things you should know about your student loan
July 25, 2018
A student loan is an important investment in yourself.
Unlike other types of borrowing, borrowing a student loan for your education is an investment that will only grow in value.
Even though student loans are a good investment, you must manage the loans wisely and only use the money to pay education expenses.
Before you sign the student loan promissory note, you should review and understand the following items:
- Interest rate. The interest rate will affect your repayment amount and length of repayment. Understand when interest begins accruing and how that impact the total amount you repay.
- Loan repayment start date. For federal student loans, the repayment start date is usually 6 months after you graduate or leave school.
- Payment amount. Understanding how much you will repay each month will enable you to plan your budget after your graduate.
- Prepayment options. For most federal student loans, there are no prepayment penalties and prepaying could help reduce the overall amount you pay back on your student loan.
Remember to take your time and read your student loan promissory note. A loan document is a legally binding agreement and you have to repay all funds you borrow.
Don't be afraid to ask questions. Borrowing money is a big commitment and you should be comfortable with the decision you make.