When attending college, it’s almost certain that you will need some form of financial aid. Plenty of students use scholarships or grants to help them pay for their studies. But those types of financial aid only go so far, so some students may need to consider taking out a student loan.
Whether you’re borrowing from the federal government or a private lender, there are advantages and disadvantages to taking out a student loan. That is why we at MaxCash have come up with the pros and cons every student should know before taking out a student loan.
Advantages to Taking Out a Student Loan
- You Don’t Need Good Credit: When it comes to other types of loans, your credit score is the largest determining factor on whether you could obtain approval. But when it comes to federal student loans, credit is not factored into the approval process.
- Less Fees: When you are borrowing money for a student loan, lenders tailor their loans specifically for students. This allows lenders to create loan packages that have less fees in order to attract more clients. In some instances, lenders have been known to wave both the origination fees and early repayment fees.
- Lower Interest Rates: With most other loans, interest rates can vary depending on the type of loan you get and the lender you choose. But by taking out a federal student loan, you don’t have to worry about fluctuating interest. With a fixed rate, your student loan interest will not change over the life of the loan, making repayment much easier.
- No Need for a Co-Signer: If a borrower has little or no credit history, then they will need to have a co-signer to acquire approval. But with a student loan, a co-signer is unnecessary as lenders know that new college kids may not have good credit.
- Deferred Payments: One of the great things about student loans is that you can delay paying back what you owe for some time. If you took out a private loan, you can defer payments for about 12 months. But if you have a federal student loan, then you could be looking at a deferment of up to 3 years depending on your financial situation.
- Students Can Build Credit: Most college students have low credit, or unestablished credit. But by having student loans and making payments on time, students can build their credit and improve their rating over time.
With our years of experience and our large network of lenders, MaxCash could help you find the student loan you need with ease. Our experience comes into play as we help our clients find an affordable loan, receive desirable benefits, and answer any questions along the way.
If you still have questions about MaxCash and what we do, read up on our history and our company values.
Disadvantages to Taking Out a Student Loan
- Student Loans Can be Expensive: Depending on where you go to school, college can be insanely expensive. Some students acquire upwards of $50,000 in debt after graduation. Coupled with high interest rates of 11% to 15%, students may pay off their loans after a significant amount of time.
- Possible Variable Rates: If you wish to take out a private student loan, then do some research to find a lender that provides fixed rates. Variable interest rates can spike and cause monthly payments to be high.
- Student Loans Can Lower Credit: While student loans can be beneficial in helping build credit over time, they can also damage it. If you fail to make your payments on time, your credit could be negatively affected. Having low credit could make your life harder if you need another loan later in life.
At MaxCash, we strive to provide financial information to our clients and non-clients alike. We do this because we know how hard navigating finances can be, so we do what we can to aid others. But we do more than just supply information, we also help people obtain loans, find lenders, and so much more.
If you want to see what MaxCash can do, then why don’t you pick up the phone and give us a call at (833)-207-9052 or send us an email at email@example.com.