After all, you were a smash-hit in community college and now you’re transferring to university, which is certain to land you a job making the big bucks.
Because of these beliefs, many of today’s community college transfer students think nothing of taking out high-risk loans, thinking “Oh, I’ll pay them off later.”
The truth is, however, is that not everyone (or even most people) gets a stellar job in this economy and that you have to be selective and smart when signing on the dotted line for those too-good-to-be-true transfer student loans.
Choose Interest Rates Wisely
When speaking in terms of federal loans for transfer students or regular students, going for a subsidized loan, rather than an unsubsidized loan, is almost always the smarter choice.
With subsidized loans, your interest is taken care of while you’re in school.
With unsubsidized loans, on the other hand, you’re responsible for paying off any and all interest, whether you do it while you’re in school or after you graduate.
Subsidized loans are based on need, so everyone won’t qualify, but if you can, choose that route.
In any case, research the average interest rates and don’t choose any lender who goes above and beyond the norm.
Pay on Time
Did you know that a huge chunk of your credit score—up to 35%!—is determined by how consistently you make payments on time?
This applies to student loans too, so make every effort to get those payments in on time.
Not only will you avoid costly late fees, which can quickly rack up, but you’ll also be improving your credit score, little by little.
If you are ever unable to make your payment on time, contact your lender immediately to work something out.
Good communication can make all the difference between a poor credit score and a stellar one.
How Much Do You Owe?
There’s a tendency, especially among recent grads, to completely ignore that looming figure at the bottom of the bill page—the one that says how much you owe in total.
Make sure you don’t do that, especially since your owed amount can impact your credit score as much as 30%.
Obviously, the higher the amount that you owe, the worse off your credit is.
Try to borrow less when possible and always make getting that big number lower your ultimate goal.
Plus, when you’re realistic with yourself about what you owe, you’re a lot less likely to make late payments or to skip out on payments altogether
Don’t Go Credit-Crazy
It might surprise you to know that your credit score is impacted (negatively) by every new line of credit you open up.
While it can be tempting to open up that new credit card when you’re swimming in debt, don’t do it!
This only shows that you are falling further and further into debt in an effort to take care of old debt.
Whenever possible, absolutely do not finance your transfer student loan payments.
All this is doing is digging you deeper and deeper into the debt hole and costing you more on your loans in the long run.
Also realize that, with most loans, especially federal ones, bankruptcy isn’t an option.
Sooner or later, you have to figure out some way to pay the piper, and it’s best if you can do it without acquiring new debts.
About The Author
This article was written by one TJ Barea, a freelance writer with interests in finance, education and technology based in the greater metropolitan area of Atlanta; this piece was crafted for credit reports of Craig Lynd for the purpose of increasing greater financial literacy among the world.