Profitt Report: Lowdown on student loans, what you should know before borrowing
There’s a lot on a college student’s plate: new classes, a job, living on their own for the first time. On top of that, many are taking out loans for the first time.
“We want to make sure students read the information, they review it all carefully and then they respond,” said Lori Vedder, financial aid director at the University of Michigan-Flint.
She said navigating your student loans can be tricky, especially as a new student.
“Unsubsidized an subsidized loans first are through the federal government and we recommend that students apply for those loans first before looking at any private lending,” said Vedder.
Here’s the difference between the two: subsidized loans are based on need and the U.S. Department of Education covers the interest. With an unsubsidized loans, you’re on the hook for the interest.
“If at ever possible, they can make payments on that interest or on the principle while they're in school, that's very advisable,” Vedder said.
That interest will grow and get bigger over time and you’ll have to pay it back eventually, anyway.
There are also private loans and they don’t work quite like student loans.
“Some of them will have different upfront fees and different things that will happen at the end that will make them more expensive in the long run and they don't have the deferment options like the federal student loans, subsidized and unsubsidized, have,” Vedder said.
For information on federal student loan repayment plans, please click here.
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