Things to think about before signing student loan paperwork
Making the decision to go back to school is one of the biggest choices you'll ever make. Although earning a college degree is a valuable investment in your future, it's also a decision that will have lasting implications for other aspects of your life - especially your finances. Before you sign up for accounting classes or enroll in a dental hygiene certificate program, here are some things you might want to consider:
• Calculate the return on investment: Although this sounds like something an investor would do before buying stock in a company, this isn't dissimilar from what you're doing by going back to school. Before you agree to borrow any student loans, you need to ask some questions, namely how much you can make in your future job and how much the loan repayments are going to set you back. It's all well and good borrowing money to achieve your dreams, but don't forget that you'll have to pay it all back sooner or later.
• Make some tough decisions: Sure, everyone wants to attend a school like Harvard or Yale, but unfortunately, not everybody can. Before you sign on the dotted line, ask yourself if you can really afford to attend an expensive private school. Remember - state schools often offer the same degree programs as private colleges at significantly less expensive rates of tuition.
• Cover all your bases: You don't need to be a varsity athlete or a child math prodigy to be eligible for grants, scholarships and other merit-based financial aid. One of the most common mistakes made by prospective students is failing to apply for these programs or assuming they aren't eligible. It doesn't cost a penny to apply for grants and scholarships, and even if you're denied funding, it won't hurt your student loan applications. What have you got to lose?
• Crunch the numbers: The first form you should fill out is the Free Application for Federal Student Aid (FAFSA). Chances are, unless you plan on attending a very inexpensive college or receive a lot of scholarship or grant funding, a federal loan won't cover the entirety of your tuition. If this is the case, you should crunch the numbers of the various private student loans that are available to you. Read the fine print for clauses regarding compound interest, deferral terms and other conditions of repaying your loan. If you're confused, talk to a financial aid officer at your prospective schools.
