I know money talk is not everyone’s favorite subject, and you probably get a headache every time you think about the debt that you are going to be in once you finish college, but avoiding the elephant in the room won’t make it go away.

When you think about the average debt for graduates is around $37K, it makes sense to start thinking about how you are going to cope with this and what your options are. You don’t want to be another girl with a mountain of debt and a mountain of shoes to match it. If your parents haven’t put together enough money, and your student job is not helping you cover both tuition and cute outfits, a loan could be your only option.

Let’s take a closer look at your possible choices.

Federal Loans

The first pick when thinking about student loans is the state-subsidized federal loans which have the plus of giving you a break until you graduate and even a window of a few months to get a decent job before starting the repayment process. Also, the rate is fixed and smaller than credit card rates.

Additionally, some of the interest could be deductible, and you get the option to freeze or postpone rate payments and also renegotiate your instalment. If you are doing well and your education is really paying off, you could repay your loan sooner than the expected date without suffering any penalties.

Uncle Sam trusts you, and unless you already have a damaged credit history or ask for a ridiculous amount, you will not need a co-signer.

If you come from a financially challenged family, the government will help you and pay your interest while you are in school.

Private Loans

Of course, in general, the advantages carried by the Federal Loans can’t be matched by private loans which are granted by financial institutions with an eye for profit. To secure their risks, these companies ask for co-signers, an established credit record with good scores and no subsidized options.

Yet, as tuition costs rise every year, you could think about taking a smaller private loan as a way to fill in the need for extra money. There are a number of lists of the best private school loans for students, do some shopping around before making a choice.

Don’t expect to be able to repay them with a lump sum before the due date without penalties, enter a forgiveness program or even roll them into a debt consolidation.

The most exciting aspect is that for a few possible borrowers, a private loan could be a better deal than a Federal Loan. The tier system used by credit companies divides all applicants into tiers based on their FICO score and credit history. Those holding an excellent rating and with a long history, usually people who think about college after they have been working for a while and think about continuing their education, can be better off with a private loan, getting a lower rate.

Also, students taking loans to get an education leading to high-income jobs are most likely to get better rates. Studying for an MBA or Law School could be expensive, but you can repay the debt in just a few years and you are more likely to be granted a better variable rate.

Your choice?

When thinking about funding your education, you should take a strategic approach and get out the pen and paper, sit down with your parents and try to find the best solution for your needs. Always consider other financial help options like scholarships and getting a job and only ask for the remaining amount. Try to maximize your career choices and find organizations to support you either by paying for some of the education costs.

Kara Author: kara

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