Questions for a Student Loan Officer

By Allie Caton on October 26, 2017

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One of the first things that should be on your mind when you are getting ready to go to college is how you are going to pay for it. Whether you’re going in-state or out of state, college can be extremely expensive. Before anything, make sure you take advantage of any grants or scholarships you can find. Once you’ve exhausted all options there, if you still need financial assistance to pay for tuition, you can ask for a student loan.

This is probably the first big loan that you will have taken out, so it’s important to research before doing anything. There are a number of avenues you can take when getting a loan. You can either take out a federally funded loan by filling out the FAFSA or you can take out a loan from a bank such as Discover. Either way, you want to make sure that when you meet with your student loan officer, you have a lot of questions ready to get answered so you know exactly what is going on with your money.

Money can be a hard thing to talk about sometimes, but it’s important to make a connection with your student loan officer so you can fully understand your plan. Your loan officer is there to help you, not judge you. It’s their job to help you understand and get the best loan you can, so it’s best if you are open and honest with your questions.

Don’t be embarrassed to ask what you think is a dumb question or feel ashamed to ask something about your personal finances. Be upfront with them so they can do their job to the best of their ability. Here are some questions that are imperative to understand.

1. What is the interest rate?

This one is so crucial. Interest rates can be devastating if you don’t have a plan with a good rate. They might not seem so important at the beginning, but they add up quickly and can really balloon what you owe later on. Make sure to ask if the interest rate is fixed or variable. Variable rates can change monthly or annually until your loan is paid off, so make sure you get a solid understanding of how your interest rates work so you aren’t blindsided when you go to pay.

Ask if the interest rates will change after you graduate or if they will stay the same. Some plans have fixed interest rates that change after graduation, so you want to know if this is the case so you aren’t thrown off post-graduation.

2. What are the eligibility requirements?

Before you start to apply for a plan, make sure you meet the criteria. Don’t waste your time applying for something that you aren’t even eligible for; research or ask your loan officer what the eligibility is before doing anything. Also, ask about whether or not you will need a cosigner. Most likely, you will. Most incoming college students don’t have enough credit built up to sign the loan themselves. If this is the case, ask your parent, guardian, or another trusted adult to cosign the loan with you.

3. How does payment work?

This is a large question made up of a bunch of different parts. There is the question of when you start your payments, how much each payment will be, and what happens if you miss a payment. Depending on the loan plan, the answers to these questions can be very different.

When you ask about how much each payment will be, get a specific figure. If you don’t know how much your loan is going to be yet, throw out a hypothetical number and have your loan officer tell you exactly how much a payment for that amount would be. This will help give you at least an idea of what you will be expected to pay each increment. Also, ask about loan forgiveness programs and which plans have good ones.

4. What happens if I want to go back to graduate school?

Plans will sometimes change if you decide to go back to school and need to take out another loan. As your student loan officer about this whether or not you are planning to go to grad school just in case. Also, ask about the post-undergraduate grace period and if that would be influenced by grad school.

5. Should I take out a federal or private loan?

This decision is a personal one depending on your relationship with your banks and just your level of comfort. Federal loans are often better for students because they are more stable and reliable. Bank loans can be riskier and end up more expensive because most have variable interest rates.

Depending on your relationship with your bank and how good your credit is, banks might give you a lower initial rate, but watch out for variable rates that go up. Federal loans often have more flexible payment options as well. However, it’s really up to you and your cosigner to decide which plan you feel most comfortable going for.

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