5 Things to Consider Before Taking On a Student Loan, Compliments of the WSJ
In Wednesday's Wall Street Journal, columnist Josh Mitchell offered potential student loan borrowers 5 things they need to know before signing on the dotted line:
1. Research what aid is available to you - including scholarships, state and federal grants, and then federal student loans.
2. Know the terms of your loan(s)- including interest rate, repayment period, when payments begin, etc.
3. Loans are debts that cannot be discharged in bankruptcy - when you sign on the dotted line, those debts will not go away until you pay them.
4. Research your college or university - not just their overall ranking or graduation rates, but also their 3-year cohort default rate, a measure of how many of their graduates default on their loans within three years of graduation.
5. Research the earning potential of your planned major - consider whether you are taking on too much debt relative to the earning potential of your desired career.
In addition to the ones listed above, Heather suggests the following:
1. Be careful when considering private student loans. In general, private student loans offer fewer borrower protections and less flexibility in repayment.
2. Understand your repayment options, which is harder than it sounds. You may qualify for Income-Based Repayment, Income-Contingent Repayment (ICR-A), the President's new "Pay As You Earn" repayment program or Public Service Loan Forgiveness.
3. Don't borrow more than you have to. Unneccesary debt is like an ugly Christmas sweater... just don't do it!
To read the entire WSJ article, click here.
