Post-secondary education is one of the most effective ways to ensure a lifetime of gainful employment. It is a noble and worthy investment because it equates to investing in yourself. Whether you’re stepping into a four-year degree program or attending a trade school, such an investment promises to pay dividends down the road.
One of the most salient points of post-secondary education is that statistically, people who hold a college degree are capable of earning, on average, an 84 percent higher rate of median earnings, which comes out to about $36,000 per year. One could posit, too, that trade schools often set students on their own professional journeys that can prove to be lucrative.
How Should You Think About a Student Loan?
Student loans are an investment, albeit generally a costly one. Traditional four-year colleges cost an average of $36,000 over that period. Even trade programs or associate degrees generally cost between $5,000 and $15,000. Many young people consider such sums difficult to amass, especially if they have other expenses, such as rent or the cost of a vehicle.
The best way to think about a student loan is to acknowledge that the money that you are borrowing will pale in comparison to the money that you will earn from the experience granted by the loan. Another benefit, if you prove to be responsible with your loan, is that you can use the loan to improve or maintain a good credit score.
When considering a student loan, there are several things to investigate. You should consider how the amount of the loans that you take will affect your future finances and how much you’ll be able to afford to repay. Ideally, your student loan payments should only be a small fraction of your salary after you graduate. This makes it incredibly important to take only what you need for education-related expenses and be really frugal with the amount that you will take.
What Types of Private Loans Are Available for Students?
When it comes to private loans, there are loads of agencies to choose from. To offer perspective, consider some of the most common forms of private loans that students can obtain: bank-based private loans, credit union loans and peer-to-peer loans.
When banks commit to offering a student loan, which is traditionally a hugely popular means of securing the loan, they offer loans with variable interest rates and repayment terms that typically begin six months after graduation. In recent years, banks have trended away from student loan programs, while others raised interest rates and credit requirements. Still, lots of banks still participate and if your research yields that they are offering competitive interest rates and other terms, it remains a viable option.
Credit union loans are also becoming a popular means of financing. Some credit unions are partnering with state education agencies to ensure that students are able to access college funding. Others participate in programs that let potential students know that these loans are available. Loans from credit unions often carry lower interest rates and more favorable interest terms than bank-based private loans. Applicants for this type of loan are normally put through a credit check and will complete an application process similar to that of a loan from a private bank.
Peer-to-peer lending features a type of alternative student loan that is made directly to students by individuals through a website that brokers deals and draws up contracts. These loans are liable to have vastly different interest rates and terms of repayment, as they are not bound by the same regulations and restrictions that banks and credit unions are. Applying for, and receiving, a student loan is an exercise in believing in yourself. After all, who will invest in you if you won’t invest in yourself? At the same time, studying to ensure that you take the necessary amount, without too much extra, is a chore that could save you lots of money in interest payments down the road. Whether you’re considering college, graduate school or an electrician program at a trade school, if you have a v