Student Loan: Do You Need One?

Let's face it - college education in America costs crazy money. For the 2019-2020 school year, the nationwide average for a year of tuition and required fees at a private 4-year college was $32,769. But, of course, not every student can afford this. Moreover, not every family has enough money to let their child finish college.

The state and private lenders offer student loans. Some have pretty good conditions, but not everyone can get them.

Let's start with federal student loans. First, they are more attractive than loans from private lenders because they have lower rates. Such loans are subsidized and unsubsidized.

Subsidized student loans are perhaps the best you can hope for when it comes to paying for tuition on credit. In addition to low-interest rates (currently 4.99%), they also offer a subsidized period. That is, the state will pay for the loan during the training and six months after. Sounds pretty tempting, doesn't it? But, as always, not everything is so simple. Only students with a very difficult financial situation, which they have yet to prove, can receive this loan. If your financial situation is simply difficult, without "very," there is no point in hoping for such a loan.

Unsubsidized loans have an interest rate of 6.54%, which is also not bad. You should not expect any benefits and deferrals, but there are no special requirements either. All in all, not a bad option if you are going to study and work to pay off your loan.

Private student loans are another story. They do not make any demands regarding the financial situation of the family. Although, no, it's wrong. To obtain them, the family's financial situation is important, and it should be good because the requirements for a private student loan are usually the same as for a personal loan. That is, the credit rating will have a serious weight in the question of the terms of the loan and the possibility of obtaining it.

But despite the complexity of the situation: what choice do students have? You can simply give up the dream of higher education. But, on the other hand, and it sounds sad, but... do you really want to study, or are you just doing it because everyone else is doing it? If it's just an attempt to join a different lifestyle, then this attempt is costly. But if you really want to study, maybe you should choose a public college first. One that you can really afford with an eye on your budget. There you will at least understand whether you need to study and whether you are ready to get into a loan for several years (or even several decades) for this.