This post was written by the former Estonian Credit Union, now Northern Birch Credit Union.
Okay, are you getting ready to go to school in the fall and looking into your financing options? For many young adults, student loans serve as the first real experience with borrowing a large amount of money. Here are some key things you should know before getting a student loan:
1. Your loans will either be government-issued or private
In general, student loans come in one of two forms – government-issued (federal or provincial) or private (from individual lenders like credit unions or banks). Government-issued student loans tend to come with incentives like fixed interest rates and the ability to restructure payments based on income; however, with a little research, you may be able to find a private loan with lower interest rates or rules.
2. Short equals less, long equals more
When it comes to repaying your loans, the faster you agree to pay off your debt, the more you’ll likely pay per month, but you’ll be spending less in interest over the life of your loan. Conversely, if you decide to make smaller payments towards your debt over a longer period of time, you may end up paying significantly more interest over time.
3. Loan repayment assistance may help in times of need
The National Student Loans Service Centre (NSLSC) has some different programs in place in order to provide assistance to individuals struggling with repayment. Even if you are paying off a provincial student loan, you should still familiarize yourself with the national loan program, as all provincial student loans are integrated with the NSLSC. The repayment assistance options available through the LSLSC are term revision and a two-stage repayment assistance plan. Check with your lender to see if these options are available to you, and what the circumstances are to qualify.
4. There’s a difference between refinancing and consolidation
Two options to help you get debt-free faster are consolidation and refinancing. Consolidation is the act of combining all of your loans into one payment with an interest rate that will likely be an average of your existing loans. Consolidation simplifies your payment process, but doesn’t necessarily reduce your debt burden. Refinancing uses a new loan (hopefully with a lower interest rate) to pay off your existing debts. You’ll then make a single payment per month towards your new loan. The lower interest rate can help you dig out of debt faster.
5. Seek out scholarships!!!
Apply for every form of scholarship, grant and tuition waiver that you’re eligible for. Research, research, research all the opportunities available to you. Be exhaustive in your search, even the smallest awards and prizes will add up!!
Looking for a student loan? Check out our website to see what we offer, or contact our lending department to discuss your options firstname.lastname@example.org