Student Loans – What You Need to Know

Private student loans are becoming more popular amount college students. In the late nineties the private lenders made about 5{4ec66d537739005ccd5ed56e62ee5e9eb3f533a4d07ddf8b17a0db96e01adf11} of the student loan market. Today the private lenders have about 20{4ec66d537739005ccd5ed56e62ee5e9eb3f533a4d07ddf8b17a0db96e01adf11} of the student loans. Although the government limits the amount that the students can borrow, the private lenders are willing to lend much more money, allowing students to get in further debt. However, college student should be wary of the loan that they took out. A lot of college graduates are finding that they are having hard time paying for their college loans after graduation.

The payments for the student loan should make up about 10{4ec66d537739005ccd5ed56e62ee5e9eb3f533a4d07ddf8b17a0db96e01adf11} of the gross paycheck of a college graduate. Before taking out a loan a student should research the annual income for his future position. However, if you have a family with children this percentage may have to be lower to substitute for other expenses. The mortgage payments, education loans, credit cards, car loans and other loans should not eat up more than 35{4ec66d537739005ccd5ed56e62ee5e9eb3f533a4d07ddf8b17a0db96e01adf11} of your gross pay. Otherwise large student loans may take a graduating student forever to repay.

Furthermore, some of the choices that students make may change the amount of loan that is due after college. First, remember that the cost of tuition is rising. The cost of the last two years of college will cost about two thirds of the total tuition cost. Therefore budget your loans. Try not to spend money on extravagant things, as if it is unlimited source of money. Getting a summer job and a part time job during college will also decrease your loan amount. Loan of couple of thousands may grow to a much larger amount after couple of years of annual interest rates.