Short-Term Student Loans: Worth the Risk?

January 15, 2009 | Posted by admin

College students in the year 2009 are faced with way more financial considerations than their parents’ generation. Gone are the days when a full-time summer job could cover tuition and board for one full academic year.

Tuition is rising, even out-pacing inflation, and that leaves cash-strapped college students to make difficult financial decisions. One of those decisions involves whether or not short-term student loans are worth the risk.

Short-Term Student Loans

Short-term student loans fill in the financial gap for many college students. Perhaps, the students have applied for federal subsidized loans that will cover their tuition and other unavoidable expenses such as books and supplies.

However, it can take nearly a month or more to receive a reimbursement check from your college’s financial aid office. That does little to help students who need their textbooks the very first day of class.

Alternatives to a Student Loan

Before taking out a short-term student loan, read the fine print carefully. Pay it off as quickly as possible after you receive your reimbursement check from the financial aid office, especially if doing so will reduce or possibly avoid additional interest from accruing.

If you’re a college student hesitant to take out a short-term student loan, then you’ll really have to get creative. Buy the textbooks for those classes that it’d be impossible to get by without.

Enrolled in an English literature class? Stop by the university or local library to take out copies of the novels your professor has assigned. Consider borrowing a friend’s textbook who is in the same class as you are until your reimbursement check arrives.

Prevent the Crisis in the First Place

Avoid short-term student loans in the future by looking ahead. It’s sometimes easy to overlook this, especially when you’re preoccupied with writing term papers and studying for exams. At the start of the school year, apply for additional funds through the more common, lower-interest federal subsidized student loan program.

Set aside the extra money you receive from your reimbursement check in late September for books and expenses for the spring semester and possibly the fall semester of your following year. This can help you avoid the need for short-term student loans at that time and result in you getting the money you need at the best interest rate possible.

In an effort to get to the head of the class, it’s sometimes necessary to utilize all types of funding options to meet your tuition and expenses. You’ll need to make those tough decisions, especially if getting through college and earning that degree is a top priority for you.

Simply because you take out a short-term student loan this year doesn’t mean you’ll always need to rely on this type of funding. Evaluate how much money you were short at the start of the school year, and make plans over winter break or summer vacation to earn additional income to meet that financial gap.

Final Thoughts

The bottom line is that at some point during your academic career it might be necessary to take out a short-term student loan. While the interest rate might not be undesirable, you have to look at the big picture.

Getting a college degree can be a costly endeavor, and it’s helpful to take comfort in the fact that a variety of programs exist to help struggling students meet their immediate financial needs so they can stay on pace for graduating on time.

The sooner you get that degree, the sooner you’ll be on your way to earning, and over your lifetime having that degree will pay off.

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Categories: Student Loans | Tags: short-term loans, Student Loans | 1 Comment Â