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Perspective on Educational Loans
When planning on how to pay for college, most students and their families think about scholarships and grants. Loans are seldom anyone’s first choice in funding an education. Given the fiscal realities of the time, loans will remain the largest category of funding for a college education.
Loans to provide funding for college should be viewed differently than other consumer loans for a number of reasons: - A student’s educational loans through the U.S. Department of Education do not require a credit check or a cosigner.
- Interest rates are lower than most consumer loans.
- Repayment of principal will not begin until a student graduates, falls below half-time status or withdraws—whichever comes first. Even then, there is a grace period before loan repayment begins.
- When you take out a loan for a car, the car’s value depreciates as soon as you drive off the lot. When you borrow to help meet college costs, you are investing in your personal development and your future. Unlike a car, your worth and potential should not depreciate.
While you are using these loan funds for a very good purpose, it is also important to be
realistic about your ability to repay your student loans and the impact that borrowing more
than you need can have on your future lifestyle. Remember to “Live like a student while
you are in school, so you don’t have to live like a student after you graduate.”
"Live like a student while you are in school, so you don’t have to live like a student after you graduate.”
- Mark Kantrowitz
Publisher, FinAid.org
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