As any student knows, education is expensive. No matter how you do it – part-time, full-time, nights, days – tuition costs money and, quite frequently a lot of it.
Lots of students seek out help for college costs through scholarships, work reimbursements, work study, grants, and loans. Of all these, loans cause the most long-lasting effects on your budget because they have to be paid back. When you’re considering your loan options to finance your education there are a few things you should know.
1. All Loans Are Not the Same
Federal loans (including direct subsidized and unsubsidized, Direct PLUS, and federal Perkins loans) are made by the federal government and generally have a fixed, low-interest loan rate. These loans are paid back over a designated number of years and the interest rate (fixed) remains the same throughout the life of the loan.
Private loans are generally made through a bank or credit union and the rates are generally variable. These loans sometimes require another person to sign the loan (a co-signer) and the interest rate (variable) can change over the life of the loan. Private loans typically start out with a low interest rate, but the rate is almost guaranteed to rise over the life of the loan. If you choose a private lender, ask if there’s any fee if you pay the loan in full before the loan’s designated end date.
2. Nursing Students Benefit from Specialized Loans
Nursing students can seek out loans specifically for their field. The Department of Health and Human Services has loans specifically for those in health professions. There are several nurse loans available through the department’s Nursing Student Loan Program, which is administered through your school’s financial aid department.
3. Loan Repayment Options
Some student loans can be partially paid by working for the Nurse CORPS, in which you agree to work for two years in exchange for paying off up to 60 percent of your loans. Like a service contract, nurses work in poorer communities to better the health of the residents and build strong community ties in the process.
4. Postponing Loan Payments
If you find yourself unable to repay your loan for various reasons, a deferment plan can postpone your payments, and interest will not accrue in the meantime. Another option allows you to defer payments, but interest will continue to accrue. Federal loans are typically more favorable to a deferment, and private lenders are under no legal obligation to offer any kind of deferment. It’s very difficult to get any type of loan forgiven, meaning the loan grantor will absorb your remaining loan, and you won’t have to make additional payments.
5. Defaulting on Loans
Entering into a student loan contract is serious business, so consider everything carefully. Defaulting on a student loan, meaning that you claim an inability to ever repay the loan, is almost never an option. The federal government will pursue repayment in many ways (taking your tax return is one), and although private lenders don’t have quite as many options for getting their money as the federal government, they can still wreak havoc on your credit history and make it difficult for you to get future loans.