Short term student loans differ greatly from standard loans. They are to be used for an academic emergency such as a textbook purchase. These loans should be taken very seriously as they bear interest and can risk eligibility for federal loans.
If these loans are not paid back on time, they can also scar your credit score, leading some to question whether or not short-term student loans are worth it. It is important in college years to maintain a high credit score. In the future, your credit score will be used for employment checks, insurance eligibility and determining interest rates on loans.
Making any decisions that will affect your financial future should be considered carefully. It needs to be determined if a short term loan is truly necessary.
Short term loans have suffered with the economic slowdown of recent times. Many lenders and schools are not dispensing money as they used to due to the risk of losing money.
Experts recommend that students who need money or financial aid turn to bigger lenders such as Sallie Mae or banks such as Bank of America and Citibank. These lenders are not increasing their interest rates or payback regulations with the changing economy and their assistance is more guaranteed due to their positive standing in the economy.
Short term loans require quicker payback. Often the student is required to pay back the loan in as little as 90 days. If a student borrows the usual maximum amount of $500.00, the monthly payment would be $167.00 without considering interest. There are additional fees incurred such as an application fee that is taken from the loan amount. Be sure you can pay this back within the short period.
If in the event the loan cannot be paid back satisfactorily, the college or university has the right to withhold transcripts, grades and even a diploma from a borrower. Colleges can also prevent a student for registering for classes if the loan is not paid back. Any future loans through the university will also be denied. This means that at the end of your college career you may not receive your diploma because you could not pay your loan back.
The eligibility requirements for a short term student loan differ from school to school but they often include upholding a certain GPA. If you are just starting out in college and are unsure what your grades will be like, do not sign up for a loan that depends on your GPA. Give yourself a year to become established and to budget your expenses.
You may find that paying back a loan will be more difficult than you anticipated. Loan eligibility may also depend on the number of semester hours that you are enrolled for. You should only commit to the number of classes and credits that you can handle and taking on more will negatively affect your grades and success.
Incurring debt during college years is risky and should be avoided. The economy is failing and lenders are falling down around the country. Borrowing money from a college or university is just as risky. It is recommended that you borrow money from a relative or friend before signing on with an IOU.
This arrangement will not usually accrue with a personal arrangement and if you run into hard times and cannot pay your loan back as agreed, a friend or relative is likely to be more forgiving.