Taking On A Student Loan? NJ Banker Offers Tips [AUDIO]
We often hear stories of students who take out loans and head to college only to find themselves unable to pay off their loans upon graduating. But, that doesn't have to be the case if you prepare ahead of time.
"First, you should exhaust all other options before taking on a student loan," said Maurice Benson, VIce President and Regional Manager for Education Financial Services at Wells Fargo, "That may include federal loans, scholarships or grants. If there's still a gap or there's still a need between what the cost of education is and what aid you've received, then that's the time to start looking for a private loan. You should also know the difference between federal and private loans. One of the biggest misconceptions about the two is the idea that private loans compete against the federal loans. That's simply not the case. If a student were to call and ask me what they should do to borrow, the first thing I would ask them is if they've exhausted all of their other options first. And that would include a federal loan."
Is there a difference between federal and private loans?
"The difference is that private loans cover the gap between where federal loans and free money, like scholarships and grants, don't cover the cost of education," said Benson, "Once you take on a loan, the best advice I can give is to stay on top of your paperwork. Understand your repayment options. There are different programs you can enter that can help you handle the balance."
"From the beginning, though, you should view your paperwork on an annual basis and know exactly what is going on the entire time. You can look at your current balance anytime and get a repayment schedule from your lender that will show what your exact interest rate is, what your payments will be and how many payments you'll make," said Benson. "Once you graduate, take advantage of the six month grace period by getting your paperwork in order. By staying ahead of the game and staying informed, you can't be blindsided when it's time to start paying back what you owe."