5 Things to Remember when Taking out Students Loans

Congratulations! Your child is now about to embark on a new academic journey -- college.  Despite the excitement of this new phase, you may be worried about an important component of college: the fee.  Whether it is you or your child paying for dear college, we all know that money will be an important issue here. So before you take series of payday loans to initially pay for college, you may want to be equipped with the right information on a better option - student loans.

1. Be smart enough to only take out the loan amount which you think will be a lot less than your entry-level income. Note that, on average, a student borrower will find himself under a massive debt amounting to $26,000. Despite the comprehensive plan of the US federal government to reduce the skyrocketing cost of college tuition, you can still expect a lot to pay afterward. To ensure that you are taking the amount you can repay and review the salary information from websites such as salary.com, glassdoor.com, and payscale.com.

1. Take your chances on grants and scholarships. In short, start searching where you can obtain "free money." Instead of solely depending on student loans, check what type of scholarship or grants you are qualified for. These scholarships can cover as much as 30% or one-third of the total college tuition. To start searching for options, head over to websites such as collegescholarship.org, fastweb.com, and studentscholarshipsearch.com.  Some blue-chip companies also offer scholarships. It is best for parents and kids to discuss this.

1. Make private loans a second option. Yes, try to maximize federal loans first. The tricky part about taking private loans is that they do not disclose the amount they can lend you right away. You will be required to apply for it first. The repayment terms they offer can be enticing, too. However, you need to understand how much this may cost including the interest rate when you start working.  See all your federal loan options first to reduce the need for the supplemental private loan. Federal loans have fixed rate and this will be easier and 'lighter' to repay. If this interests you, then start filling out and submitting the Free Application for Federal Student Aid or FAFSA.

1. If you are interested in working as a Civil Servant, then you will have greater access to federal loans. The Public Service Loan Forgiveness lets college graduates work on government roles or in any non-profit government organizations. If they choose to do so, the repayment scheme and amounts will be entirely based on their income. Consequently, it will become easier for them to repay their student loan. Moreover, if you have successfully paid for 120 straight months, you can request for your loans to be "forgiven." Thus, this will shorten and reduce your financial obligations.

1. Take advantage of your community colleges. For instance, you can take summer classes in community colleges and have the credits be transferred to your college of choice. See the articulation agreement of the college. This would reduce your tuition cost and will let you take out a smaller loan.