Getting quality education nowadays entails that you should spend more. The cost of earning a college degree for instance has risen over the years and it has grown more than an individual’s income does. But the rising cost of education should not keep you away from picking a field of study and beginning your first day of class. There are countless of ways for you to still get into college without the burden of paying the high cost. Some of these are through applying for student loans or financial aid.
What Are Student Loans And Financial Aid?
In many universities around the world, some are open into offering student loans for enrollees through a certain program devised in order to slash away the burden of paying high tuition fees.
- These programs involve schemes that include interest rates, amount to be borrowed, payment scales, and in some instances, grades that need to be maintained.
- Furthermore, another option that is available in the market today is known as financial aid. This may be provided by state-run universities and colleges. In some cases, they may also be provided by the government and various private institutions.
Can Your Credit Score Affect Your Eligibility?
A concept that may spring up as you head over to paying your educational fees is your credit score. This score is defined as a rating that comes from financial reports and tell about your records from previous financial transactions such as buying cars, mobile gadgets, homes, and properties through credit. This comes with a three-digit figure and many lenders depend on them to gauge your trustworthiness when it comes to money matters.
- The rising cost of getting through college has urged some cash-strapped families of students to seek assistance from student loans. But their personal credit scores, the credit scores of their parents and those of their families may affect their eligibility for such assistance. How does credit score affect your student loans?
Fortunately, having a low score or having no credit history will not block you from availing of these student loans. What happens is that these credit scores are used to determine which loan package you can get and how much interest rates can be opened for you.
We have defined student loans and financial assistant on the surface, so let us get to know them a bit better.
- Federal Loans. These types of student loans are backed by the government and will not turn into your credit scores only to get them approved. This means that applicants and aspirants will be provided with the same interest rate regardless of their financial history. These are generally loans with low interest rates and are accessible for students that require them. This is by far the easiest to get approved because for one, it is subsidized and second, it pays minimal attention upon your credit scores.
- Parent Loans. These kinds of student loans are also subsidized by the government and parents can apply for them. Just like the previous one discussed above, these loans do not depend on your credit score and instead will pay attention upon your credit history. However, some stricter implementation may already exist. Having an unsatisfactory credit history may lead institutions to reject your applications. These may arise from debts that are not paid, being delinquent for 90 days, defaults on educational loans, bankruptcies, and property foreclosures among others. The focus is on the credit history of the parents rather than the students. One of the most popular schemes is known as the PLUS loans or Parent Loans for Undergraduate Students.
- Private Loans. Those financial assistance and aid that are based on credit scores are such coming from private entities. They may either come under the accounts of the students themselves or their parents. Since students commonly do not keep a credit history yet, companies require them to get co-signers in order for their applications to get approved and receive benefits from lower interest rates. Some private institutions and lenders may also take into account the potential income of the student after graduation. After all is said and done, you as the student can look into private student loan consolidation to manage the payments more easily.
Finding A Co-Signer
Credit scores and loans are always associated with co-signers or endorsers that a person is still eligible for a loan despite lower ratings. The co-signer should be a person who has good credit scores and those that meet eligibilities in order to back the applicant up.
The moment that this person signs with you, he or she shall agree to repay the loans at any time that you fail to provide the repayment. With these in mind, they also take the same responsibilities as those of the primary client. People who are interested to become a co-signer either for their relatives, close friends, or colleagues should first make sure that they are eligible to back the applicant up once he or she is unable to pay.
Getting a student loan is an important investment, especially if we don’t have the means to study but we want to get a better future for ourselves, or for our children. Understanding how credit score affect your student loans can help you better prepare and anticipate the kind of circumstances that might arise when you apply for one in the future.