Having a low interest rate is obviously a good thing for borrowers obtaining any type of loan, but when it comes to student loans, they may be even more important. Low interest student loans are the only way to get through your education without racking up a mound of student loan debt in the process. If you think about it, for many people student loan debt will be their second biggest financial burden aside from a mortgage. Here are some examples....
If you have to borrow ten thousand dollars per year for college, and you go to school for just four years, you have borrowed forty thousand dollars. Those are some pretty hefty numbers. Now figure that you are paying at least six percent interest on those loans while you aren’t paying on them. By the time you graduate you will owe six thousand dollars in interest on the principal alone! That does not include any finance charges that may also apply.
It is very easy to forget how much interest you are racking up while you are in school. Most, if not all, of your student loans do not have to be paid until after you graduate. Since you are not making any payments, you don’t tend to think about how much academic debt you are really accumulating.
Some people become confused by the financial aid process. They think that because they do not have to pay on their student loans while they are in school, all of their loans must be subsidized, and therefore are not accruing interest. This is not the case. Unsubsidized student loans are often given with an academic deferment. A deferment allows you to wait to make payments much the same as subsidized loans, but interest continues to accrue throughout the period.
This is why low interest student loans are so important. The lower your interest, the less it costs for you to go to school. Additionally, you can lower the amount of money you have to pay when you graduate by paying the interest on your unsubsidized loans throughout your academic career. This lowers your expenses after school dramatically. If you have low interest student loans, this is much easier to work into your meager budget while you are still in college.
Contrary to popular belief, low interest student loans are quite easy to find and obtain. Many of them do not even require a credit check. In truth, most unsubsidized loans are made based on financial need rather than on credit, making them much easier to obtain and making interest rates much lower. In the end, your student loan debt becomes much easier to maintain and manage as you reach completion of your degree and eventually find a career in your chosen field of expertise.
If you have to borrow ten thousand dollars per year for college, and you go to school for just four years, you have borrowed forty thousand dollars. Those are some pretty hefty numbers. Now figure that you are paying at least six percent interest on those loans while you aren’t paying on them. By the time you graduate you will owe six thousand dollars in interest on the principal alone! That does not include any finance charges that may also apply.
It is very easy to forget how much interest you are racking up while you are in school. Most, if not all, of your student loans do not have to be paid until after you graduate. Since you are not making any payments, you don’t tend to think about how much academic debt you are really accumulating.
Some people become confused by the financial aid process. They think that because they do not have to pay on their student loans while they are in school, all of their loans must be subsidized, and therefore are not accruing interest. This is not the case. Unsubsidized student loans are often given with an academic deferment. A deferment allows you to wait to make payments much the same as subsidized loans, but interest continues to accrue throughout the period.
This is why low interest student loans are so important. The lower your interest, the less it costs for you to go to school. Additionally, you can lower the amount of money you have to pay when you graduate by paying the interest on your unsubsidized loans throughout your academic career. This lowers your expenses after school dramatically. If you have low interest student loans, this is much easier to work into your meager budget while you are still in college.
Contrary to popular belief, low interest student loans are quite easy to find and obtain. Many of them do not even require a credit check. In truth, most unsubsidized loans are made based on financial need rather than on credit, making them much easier to obtain and making interest rates much lower. In the end, your student loan debt becomes much easier to maintain and manage as you reach completion of your degree and eventually find a career in your chosen field of expertise.
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