Student Loan Dodgers

Private student loans have gotten a bad rap lately. Legislators have focused on some extreme cases of borrowers who have gotten in over their heads, but for the most part, private student loans can come through where Federal student loans and grants leave off.

Grants are always the best route to go. They’re free money that you don’t ever have to repay. If you’re eligible for grants, get as many of them as you can. Grants may be one-time or renewable. Regardless, if you find them, go for them.

Federal student loans are also desirable, but they’re loans. You have to pay back the money, unless you meet the requirements for student loan forgiveness. Federal student loans are good, better if they’re subsidized, but not a bad deal in the long run. The disadvantage of Federal student loans is that they have lifetime lending caps. Once you’ve borrowed the maximum, you’re done with Federal student loans. The lending caps haven’t been adjusted in a very long time, so if you have to borrow your way through college, you may bump up against your limits quickly.

In addition, Federal student loans only cover “eligible expenses.” They can’t be used for living expenses, so again, if you’re borrowing your way through school, you can’t rely exclusively on student loans.

Private student loans can help you bridge the gap between your grants, what the Feds will lend you, and what your college education actually costs. (Funny enough, it’s always more expensive to go to college for a year than what the brochures tell you.) Private student loans don’t operate like Federal student loans do. There are no caps on interest rates, but then again, there are no caps on lending either.

The best approach to financing your college education will come from balancing your “financial aid portfolio” with grants and Federal student loans. Use college loans to make up the difference. If you shop carefully, you can find private student loans that offer great borrower benefits and good terms. Private lenders are also free to offer programs that you won’t find with lenders in the Federal college loan programs.

In short, don’t write off private lenders based on the horror stories you may have heard. Balance your financial aid, and use private student loans to cover what your aid package can’t or won’t.

When you’re in college, there are many opportunities to both exhaust your financial resources and accumulate debt. This is not only counter-productive while you’re in college, but it can also negatively affect your lifestyle well after you’ve graduated. As much as possible, avoid those negative habits that absorb your money, or worse, cause you to accumulate debt.

Drinking is one of those habits. Drinking is a very expensive habit to get into and college students tend to spend a lot on alcohol. For some people, getting out of the habit of drinking proves to be an insurmountable challenge and follows them throughout their lives. Limit your drinking. When you go into a situation where alcohol is available, set a spending limit before you go in. When you reach the limit, stop. If the alcohol is free, set a drink limit and stick to it. You’ll feel better, look better and you won’t find yourself in regrettable situations.

Gambling is another great way to establish a bad habit and lose a lot of money at the same time. The proliferation of casinos and the ease with which people can travel to cities that have legalized gambling means that college students have unprecedented access to gaming outlets. If you’re going to gamble, never bring more money than you can afford to lose. Once the money is gone, go home. Trying to recoup your losses will likely lead to even greater financial difficulties. If you want to learn about how the casino games work, take a statistics class. You’ll find out that your chances of winning are exceptionally small. If you understand just how likely you are to lose your money, you may find it much easier to stay out of the casinos.

High stakes poker, especially Texas Hold ‘Em, has recently gathered a lot of attention from college students who are looking for a quick win. Poker is a game of skill and you don’t acquire card-playing skills immediately. If you want to pursue a poker championship, learn how to play the game with good friends first. Order a pizza, use peanuts, M&M’s, or pennies as the ante, and have a good time while you learn. Just don’t spend a lot of money doing it.

If you’re looking to develop a skill that will serve you well throughout your lifetime, take up golf. Golf is still very important in business, and many universities have their own golf courses where you can learn to play on the cheap. After four years on the University links, you’ll be able to hold your own with the boss when it really counts.

If your student loan debts are entering repayment, now is a good time to consider a student loan consolidation. A student loan consolidation can reduce the number of payments you make each month to one. Simplicity is always preferable to complexity, especially when it comes to finances.

In addition to reducing the number of payments, you may also reduce the amount of money you pay each month, which can be a blessing on an entry-level salary. A student loan consolidation can reduce your overall interest rate, saving you cash on your payments, and cash over the lifetime of the loan. A consolidation loan will also allow you to elongate your repayment period. If your salary is small, or your other obligations consume a good portion of your income, being able to stretch out your repayment period can make a big difference.

On the flip side, consolidating college loans won’t reduce your overall debt. The amounts you borrowed are still there, and they still have to be paid back. A longer loan payback period means that you’ll be paying interest over a longer period of time. You’ll likely end up paying more in interest if you stretch out your repayment plan than you would if you stuck with your original terms.

Ideally, you can adopt a longer payback period and as you begin to make more money, apply extra payments to your student loans to keep your overall balance in check. It may mean doing without a vacation or a brand new car for a few years, but paying off your student loans can be a great feeling and will do wonders for your credit report.