Advice on College Loans: When to Get a College Loan, How Much to Get and How Much to Spend
There are many different types of college loans and interest payments rates and also a slew of lenders out there who are not opposed to giving loans to college students. If you are going to take a college loan, here is some advice on college loans things that you need to consider before you make that great leap into the land of the loan world.
When to Get a College Loan
The wisest course of action is to get a college loan at the end or near the end of your college tenure. The fact is, if you apply for a college loan at the beginning of college you may be setting up yourself for a grand repayment exercise that may take you years to complete. If you are required to start repaying your college loan as soon as you start working or the standard six months after graduating from college, assuming that you spent the standard four years in college and that you received a loan for every year spent; you will be burdened by a very high debt after your college experience.
The best solution is to endeavor to take a college loan when you have absolutely no other alternatives. Look at other solutions for your first two or three years of college life, student jobs, grants, scholarships and sponsorships from various bodies. With a little planning a first time college student can stave off the need of a college loan in the very beginning of college. However, if there is absolutely no other choice available to you then you can apply for only the minimum funds that are required for school fees.
How Much Money Should I Get for a College Loan?
The best advice on college loans is to get the bare minimum - the lowest amount that can keep you in college while you source other funds. Think about it, the monies that you will receive are monies that have interest tacked on to them and payment terms that require you to get a job as quickly as possible after college. Realistically, when you are ready to repay your college loan you will have to pay back a sight more, after factoring in the rate of interest, insurance and inflation or any other unforeseen additions that may appear over the years. With the bare minimum you can have some peace of mind that your final payment will not be too insurmountable.
How to Spend a College Loan
You first need to draw up a financial plan. In this plan, outline all the expenses for the year, including your school fees. Place realistic figures for such things as food, clothes and entertainment. Also include in this plan your revenue, the money that you currently have, monetary gifts and any committed cash inflows (from parents or well wishers), grants, scholarships and sponsorships.
Get a good snapshot of your current financial situation. Consider ways in which your expenses can be reduced or your revenue increased and make provision in this plan for unseen eventualities like sickness, failed courses etc. Exhaust all these avenues before you tabulate how much money you will need to tide you over for the school year. Only when this step is completed should you apply for a loan.
When you have received this loan, consider your same financial plan and make a monthly budget - following closely what you had outlined in your yearly financial plan. Exercise fiscal discipline and only spend your college loan on the items that you had designated for your loan.
Sound financial planning and discipline should ensure that the recipient of a college loan does not spend this money unwisely and knows the right time to take a college loan after all other avenues have been explored.
To see more information on college loans check out this article: Facts About College Student Loans.