Student Loans 101 | The Frugalista

Student Loans 101

by frugalista on September 1, 2011

Ok, I had a fantastic time on Twitter, last night. I held a #dealchat discussing what every college student and graduate should know about student loans. I brought in an A-Team of guest experts, Sheiresa Ngo, Multimedia Content Producer, Consumer Affairs, of Black Enterprise and Heather Jarvis, a trained attorney who’s passionate about educating people about student loans.

I enjoyed the chat so much, I wanted to share with you the #dealchat transcript. I also asked both experts to do a Q&A interview with me. Below is Sheiresa’s interview and I’m running Heather’s tomorrow morning!! Stay fab!

1) When is the best time for a student to apply for student loans? And should students apply?
The best time for students to apply for student loans is after they have exhausted all of their other options for financial aid. Students should only apply for student loans if they have no other choice. Being saddled with student loans for the next 10 to 30 years is not the ideal way to start your career (that is, if you can even find employment after graduation).

2) What are some ways to pay for college without a student loan?
Students can apply for scholarships, grants, and work study. Students might also consider applying to a tuition-free school. And if they can work it into their schedule, it wouldn’t hurt to find a part-time job. Every little bit helps.

3) What happens when you default on a student loan?
Defaulting on your student loan is quite serious. Among the consequences are garnishment of wages, difficulty qualifying for a mortgage or auto loan, and a major hit to your credit score. In fact, just being 30 days past due on your student loan will impact your credit. It will stay on your credit report for about a decade. And if you had a co-signer, their credit will be negatively impacted as well. You could also be sued for payment-and there is no statute of limitations on student loan debt.

4) What’s the best type of student loan repayment program?
It depends on your financial situation. If you are financially stable and have no problem paying the loan amount after graduation, a traditional repayment plan would be right for you. But if you’re experiencing financial difficulty, you might want to request an income-contingent plan, for example. Your best bet would be to discuss your options with your student loan servicer.

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