by Lisa Jackson | 10:08 am

As a soon-to-be college student (or the proud parent of one), the prospect of taking out student loans can be intimidating. Grants and scholarships are great if you can get them, but they don’t always cover the full cost of tuition and books. Before you sign on the line, carefully consider your options and know what to expect.

Start your student loan search by looking at the safest options first. These are generally the federal loans. They are immune to your credit rating, and their interest rates don’t fluctuate. These loans also carry some borrower protection. This is in place in case of financial issues or unemployment following your graduation from college.

Stay in touch with your lending institution. Anytime there are changes to your personal information such as where you live, phone number, or email, it is important they are updated right away. It is also important to open and thoroughly read any correspondence you receive from your lender, whether it is through traditional or electronic mail. Follow through on it immediately. If you miss something, that can mean a smaller loan.

Do not panic when you are faced with paying back student loans. Health emergencies and unemployment are likely to happen sooner or later. Do be aware of your deferment and forbearance options. Remember that interest accrues with many loans, so it’s important to at least make the interest portion of your loan payments.

Don’t be afraid to ask questions about federal loans. Not many people understand what these types of loans can offer or what their regulations and rules are. If you have any questions about these loans, contact your student loan adviser. Funds are limited, so talk to them before the application deadline.

Be careful when consolidating loans together. The total interest rate might not warrant the simplicity of one payment. Also, never consolidate public student loans into a private loan. You will lose very generous repayment and emergency options afforded to you by law and be at the mercy of the private contract.

Before accepting the loan that is offered to you, make sure that you need all of it. If you have savings, family help, scholarships and other types of financial help, there is a chance you will only need a portion of that. Do not borrow any more than necessary since it will make it harder to pay it back.

For those on a budget already stretched to the max, the idea of a student loan can be scary. Loan rewards programs soften the blow somewhat. Places to check out are SmarterBucks and LoanLink which are programs available from Upromise. These are very similar to cash back programs, where any dollars you spend can accumulate rewards which apply to your student loan.

To keep your student loan load low, find housing that is as reasonable as possible. While dormitory rooms are convenient, they are often more costly than apartments near campus. The more money you have to borrow, the more your principal will be — and the more you will have to pay out over the life of the loan.

It is best to get federal student loans because they offer better interest rates. Additionally, the interest rates are fixed regardless of your credit rating or other considerations. Additionally, federal student loans have guaranteed protections built in. This is helpful in the event you become unemployed or encounter other difficulties after you graduate from college.

Try making your student loan payments on time for some great financial perks. One major perk is that you can better your credit score. With a better credit score, you can get qualified for new credit. You will also have a better opportunity to get lower interest rates on your current student loans.

Keep in mind that your institution of learning may have ulterior motives for steering you toward specific lenders. Some colleges permit private lenders to utilize the name of the school. Such tactics are often misleading. A school might get a kickback for you signing up for that lender. Understand every aspect of your loan right off the bat.

The better your understanding of student loans, the more confident you can be in your decision. Paying for college is a necessary evil, but the benefits of an education are undeniable. Use everything you’ve learned here to make smart, responsible decisions about student loans. The faster you can get out of debt, the sooner you can earn a return on your investment.

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