Warnings About Bank Education Loans

Bank education loans can be a valuable tool in paying for your college education. As with any borrowing, you must be careful to know what you're getting into. A few simple warnings about bank education loans can help you be prepared.

Be Honest With Yourself and Your Lender

  • Carefully document your income and expenses.

  • Know your credit score and credit history.

  • Explain expected expenses or upcoming changes to income that might not be reflected in current documents.
Borrow What you Need

  • Work with your school to correctly calculate expected costs.

  • Pursue lower-interest federally-backed loans for amounts above what you can pay out of pocket.
Use private lenders, often with higher interest rates, only for what you need beyond the above amount.

Know Your Terms and Conditions

Once you are approved and sign for a loan, you are liable for that amount. Be certain that you:

  • know your interest rate and interest expense

  • understand repayment terms and responsibilities to include when payments are due

  • know any fees or expenses associated with originating or processing the loan

  • know the penalties for late payment and procedures in case of default

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