The way student loans operate differs per country. This is because of the difference in the laws regulating bankruptcy and renegotiating.
American Hope Resources has highlighted in an interview the general things you need to know before taking out student loans. Everything you need to know is answered with the responses to the five questions below.
WHAT ARE STUDENT LOANS?
A student loan is designed to assist students in paying for their college or university education and the associated fees. These include tuition, books, living expenses, and other supplies.
What makes a student loan different from other kinds is that the interest rates are significantly lower, and the repayment schedule defers while the student is in school.
WHO IS QUALIFIED TO APPLY FOR STUDENT LOANS?
To apply for a student loan, most money lenders require you to be a citizen of the United States of America or a legal resident with a social security number.
You need to be at least 18 years old. You must also need to have a high school diploma or the equivalent. Almost anyone can apply for a student loan, but it will be considered if you are truly independent.
Generally, you are independent if; you are above 24 years old, married, have children who receive half their support from you, are a veteran, or are on active duty in the armed forces.
HOW LONG DO YOU HAVE TO PAY BACK STUDENT LOANS?
Generally, you have 10 to 25 years to repay your student loan. The first payment is usually required six months after graduation, even if you might not have gotten your desired job.
Even a new application is usually placed on a 10 years plan, the standard repayment plan. So, if you cannot afford to pay within that time, you should take note of the plan you’re signing and apply for a longer repayment period. Although, the 10 years plan accrues less interest on a long-term basis.
CAN YOU GET A STUDENT LOAN IF YOU’RE NOT A USA CITIZEN?
An international Student Loan Program is available for all international students who wish to study in the USA. However, you have to be studying in one of the eligible schools. You must also have a US permanent resident or citizen to cosign the loan.
WHAT HAPPENS IF YOU DON’T PAY YOUR STUDENT LOANS?
Your student loans must be paid back, so you must understand the terms and conditions associated with the type of loan you wish to take before you borrow it.
Defaulting on student loans attracts serious consequences. Simply refusing to pay or defaulting has a devastating effect on your credit score. You might also have to pay 6% of the loan as an extra fee for late payments.
Your co-signer to the loan would also suffer a blow to your credit score. The government can also deduct 25% of subsequent payments as collection fees, increasing the loan cost.
If you cannot afford to pay your student loan, your best option is to reach out to your loan servicer to review your repayment options. Simply not paying could do a lot of harm to you.
For more information about student loans and other financial tips, visit American Hope Resources website at AmericanHopeResources.com.