Why Fast Student Loans Will Be Costly

Any time you seek fast loans, you will compromise in some areas, and fast student loans are no exception. Educated borrowers, those who have researched many options and considered alternatives, are more likely to know a good loan deal from a bad loan deal. They are more likely to be able to argue for their best interest, negotiate terms based on priorities and ultimately come out ahead. Moving too quickly through the process means you will miss out on the ability to research and compare other loans.

Lack of Research

Researching the loan market is often frustrating. There can be a lack of solid information to find from lenders who would rather play their cards close to their chests. You will need to be resourceful in your research. Contact your school's financial aid office to ask about popular lenders in the area and schedule a meeting to discuss options with an adviser. You may find there are scholarships and grants available to students in your major or with your ethnic background. Failing to research these options could lead to a larger principal loan limit. 

Lack of Budgeting

Once you know what your limits need to be, you will need to consider your budget. If you are in a hurry, a lender's offer to make no payments while you are attending school or build in long grace periods may sound like a great idea. The lender may talk you into taking a long loan to reduce your monthly payments. These can be viable options, but they may not be necessary. You will save money if you can find a way to pay your loans, or at least the interest on your loans, while you are attending school. Budgeting for these expenses by considering work-study options or summer jobs can help you save in the long term.

Failing to Understand Loan Needs

You cannot take a loan until you know exactly what your needs will be in a given semester. You will need to understand your tuition, which will largely be based on the type and number of classes you are taking. You will also need to research cost of living, possible dining plans and other necessary expenses. If you walk into a lending office not knowing what you need, you risk taking a loan that is far too high for your needs. When this happens, you will pay interest on loan funds you never used to begin with.

Missing out on Federal Opportunities

Federal loan options are widely available, even to those students who do not have a desperate financial need. These loans tend to be much less expensive than private loans. More importantly, they offer incentives through flexibility. You can always prepay a federal student debt. You will have options to refinance or change your payment terms in the future. Federal student loan consolidation is a straightforward process without penalties. Getting a federal loan, though, requires detailed time spent with applications. If you fail to dedicate this time and seek fast student loans instead, these options will not be open to you.

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