Student Loans - What's the first step?

Student Loans: What's the first step?

With the cost of education rising each day, 2 in 5 undergraduates seek financial assistance in the form of loans in order to finance their educations. So you know you need a loan. Now what?

The first step for a student should always been to fill out a FAFSA or Free Application for Federal Student Aid. The application for FAFSA can be found at www.fafsa.ed.gov and requires about an hour of your time and all of your most current tax information. FAFSA will decide your financial award dependent on several factors including family income, investments, family members in college at the same time, etc. The FAFSA is designed to make it possible for any student to attend college, so chances are you'll get at least some help that way.

The next step is to look for scholarships. Scholarships are preferable to loans because unlike loans, scholarships need not be paid back. They are 'free money' awarded to you for your education. Scholarships are available through academic programs, religious affiliations, corporations and nonprofits, and often your home college or university. They are given out for reasons ranging from academic to athletic to musical skill. There are also scholarships available on racial or ethnic bases. A great way to find a scholarship is online, there are hundreds of listings on google alone.

The last step, if necessary, is finding a loan. Loans are risky for a few reasons. First off, you need to pay them back in specific amounts at specific times. Second, failure to keep up with the stipulations of your loan can land you in big trouble, affecting your credit or even if it gets really bad, your record. Third, since often student loans are fairly lenient, it's easy to forget that you have to pay that money back eventually and just go nuts while you have it, eventually landing you in big debt later on. Accumulating so much debt early on is a bad look, and could affect your ability to get loans later on in life.

That being said, there are heaps of resources when it comes to getting loans. First, there is the choice of either a public or private loan. Public loans come from the federal government (like the Perkins or Stafford loan), whereas private loans come from independent firms like Sallie Mae and estudentloan.com. When considering a loan, get informed and make sure you keep an eye out for rates and provisions.

An education is perhaps the most important investment one makes in his or her life, and many people will need some form of financial assistance in order to realize it. The key is to find which mode of aid works for you and then to follow through responsibly.