8/22/2017

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Understanding Student Loans

The consequenses for not making your student loan payments should not be taken lightly.

One of the most talked about and hotly debated subjects of today concerns the costs associated with getting a college education. By the time students graduate from college, they are burdened with thousands of dollars in debt, especially student loans.

Before applying for a loan, a student should be made aware in the strongest terms that the loan is going to have to be repaid. Coming out of high school, most students are still in their teens and clearly not educated about loans, interest rates, debt, credit, and the consequences they will face and have to deal with in years to come.

According to news reports, most students don't have any idea about the cost of student loans and and how much they will have to pay back. This is especially scary because it is estimated that nearly a trillion dollars in student debt is currently outstanding and millions of students are subject to unfavorable scores or their credit reports.

A student loan is a bonafide loan and it is handled by lending and credit reporting agencies as such. When you are young and uninformed in matters of loans and finance, it is very easy to get caught up in the process of borrowing money without understanding the real life consequences.

  • Most people who are much older and supposedly wiser don't have a grasp on the intricacies of loans and interest rates so how are teenagers and young adults supposed to understand?

If you don't repay your student loans, it goes on your credit report. Nonpayment of your student loans will make your credit score go down substantially, and when you decide to buy a car, a home, or apply for a credit card, it will cause you to turned down.

Students should learn about the interest rates and percentage fees that are charged on loans and how lenders give options that can determine the amount in monthly payments they will have to make when they start repaying the loan.

This may not seem like such a big deal while you are in college, but it will hurt very badly when you get older and try to get a credit card or buy a home, and most importantly, you can't have it dismissed by filing bankruptcy because it is a federally backed loan.

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