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Student loans are loans offered to students to
assist in payment of the costs of professional education.
These loans usually charge lower interest than other loans,
and are also usually issued by the government.
Education loans come in three major categories:
student loans (e.g., Stafford and Perkins loans), parent
loans (e.g., PLUS loans) and private student loans (also
called alternative student loans). A fourth type of
education loan, the consolidation loan, allows the borrower
to lump all of their loans into one loan for simplified
payment.
Like any debt, student loans can influence your credit and
your future decisions. Students who borrowed a substantial
amount for college (more than $5000) are less likely to
pursue higher education (ref. 3). In addition,
student loan debt that exceeds 8% of your income can
be seen negatively when your credit gets assessed for future
loans.
Student debt is rising every year. College costs, as well as
graduate school costs, have gone up faster than inflation.
Pell grants have not kept, but, Stafford loan and other
federal student loan interest rates are near record lows.
The easiest way to reduce your student and school loan debt
is to
consolidate student loans.
School loan consolidation results in lowered debt
and payments if the average interest after consolidation is
lower than it is before. This is really just refinancing one
or a group of federal student loans, at a lower interest
rate - just as refinancing a mortgage loan at a lower
interest rate would reduce monthly payments and the total
amount paid.
Today, credit cards are as popular on college campuses on
cell phones. However, before students start completing their
applications, they need to have some basic information about
how those cards can help and hinder their future. Since most
students have never had credit before, they may not know
about credit scores. A credit score is a 3-digit number
assigned to a person based on their credit history. That
credit history includes the amount of debt owed, the
timeliness of payments, and other facts. When any person
applies for credit, their credit score is used to determine
whether they will be refused or approved. That means a good
credit score is critical for individuals who want to buy a
car or a home.
A
college credit card comes with many benefits, but
many students aren't aware of how to reap those benefits
without facing the potential dangers of credit card abuse.
There are some strategies young adults can use to achieve
that balance. Students should also practice responsible
credit card usage. Ideally, no credit card user would charge
more on a card than he or she could pay back in full when
the bill arrives. Of course, that's rarely the case. Even if
a student cannot afford to pay the entire balance on a
college credit card, he or she should pay as much as
possible and should only pay just the minimum balance when
it is absolutely necessary. Otherwise, he or she will be
paying for those college purchases for over a decade. | 
