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Sandro Rosell
FC Barcelona President
Saturday, August 19, 2017

(Continued from last week)

6. What fees will I be responsible for?

In addition to interest, you may be responsible for paying other fees. It’s important to know what these are, how much they are, and when they are due. It’s also important to keep in mind that these are often separate from interest rates, so don’t confuse the two!

The biggest difference is that, while interest is paid along with loan payments, fees are often paid up front. The amount of your fees will have an affect on your interest rate. For instance, getting a loan with no fees will often mean a higher interest rate. This can make sense if you’re planning on paying the loan off in a short period of time.

Always be sure to ask about all fees associated with a loan as they may not be totally obvious.

7. What will my monthly payment be?

Once you’ve determined the total amount you’ll be borrowing, how long you have to pay back the loan, and your interest rate, you’ll be able to calculate your monthly payment. There are several loan payment calculators available online that make this really easy.

In general, most lenders allow loans to be paid back over a period of 10-25 years. The shorter the loan term, the higher the monthly payment will be.

You should absolutely figure out what this amount will be before signing off on a loan to ensure the amount is something that you can manage. You also need to be sure and ask when your first payment will be due as this can vary. For instance, many student loans allow a six-month grace period, which means students have six months before they need to begin making monthly payments. This is meant to allow students to have time to find a job and to begin building a savings. However, some loans do not allow for any grace period and require monthly payments begin right away.

8. How are the loan payments disbursed?

You also need to know how you will receive the money you’re borrowing. For the most part, both federal and private loans require that colleges pay out loans at the beginning of each academic term. This is to ensure that students have the funding necessary to pay all required expenses such as tuition and room & board. Many universities will pay the money out directly into your student account, paying off these expenses on your behalf.

But be sure to find out if there are any special disbursement rules that apply to you. For instance, in some cases, first-time undergraduates will be required to wait 30 days before they receive their first payment. Make sure you know if any of these rules apply to you and plan ahead accordingly.

9. What’s required for the application?

Student loans always come with a set of required documents that are needed to complete an application and determine whether or not a student will receive the loan. Be sure to carefully read the list of requirements for each and every loan you apply for as this can vary.

In general, you’ll need to provide information such as:

  • Social security number
  • Driver’s license
  • Most recent tax return (or the most recent tax return of your parents if you’re listed as a dependent)
  • Bank statement
  • Other records of income (if you have any)

Don’t forget to check and see if a loan requires a co-signer. This is only the case with private student loans and isn’t required for federal loans.

10.  What deferment options are available?

Hopefully, if you’ve taken the steps to carefully ensure that you’re only taking out the exact amount of money you need and that your monthly payments are manageable, you’ll have no trouble paying back your loan. Unfortunately, the unexpected can happen, causing you to run into trouble paying back your loans.

It’s important to know before you sign off on a student loan that you understand the deferment options available to you in the instance you’re unable to make payments at some point. Deferment allows you to temporarily postpone monthly loan payments or reduce the amount your payment each month to avoid defaulting on the loan.

Make sure you understand all of the options available to you ahead of time as well as the consequences for deferring a loan.

Student loans are a great way to help college students take the next step in their academic career. However, it’s incredibly important they fully understand their loan and its terms before signing off on it. Asking the right set of questions upfront can help avoid some major headaches down the road.

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