Tips to Avoid Student Loan Sharks

A loan shark is a person or group of persons that offer instant unsecured loans at high interest rates. Due to the high interest rates, borrowers most often become trapped in debt, paying the interest for a long time without making any dent on the principal portion of their loan. These predatory lenders often back their collection methods with threats of violence or blackmail. For a college student who has to take out a loan to finance his or her education, these loan sharks should never be an option, especially during these difficult times when securing a job right after graduation is not that easy. Here are three alternatives to loan sharks:

Government loans

The government has a good student lending program and generally charges much lower interest rates than private lenders. The amount one can loan is determined by several factors that contribute to the student’s level of financial need such as assets, spousal or parental contributions, cost of living, and tuition. Under the government’s lending scheme, a student is not required to pay while still in school. During this time, the loan remains interest-free. Thus, students can concentrate on their studies and graduating on time without the added pressure of looking for ways to meet their loan payments.

Loans from credit unions or cooperatives

There are credit unions or cooperatives in some schools. These are formed as a method of saving money as a group. The savings that are pooled are then given out as loans to the members in financial need. Though these loans are generally for smaller amounts, they have reasonable rates and are easy to pay off.

Work-study programs

Instead of borro/wing money, students can sign up for a work-study program. In this scheme, students work while attending college. The wages they earn goes to funding their education.

Study grants and scholarships

The government and several private institutions have study grants and scholarship programs for almost every level (college, graduate, doctoral studies) in almost every field of study. A quick search on the Internet can show a student his or her options as to the eligibility requirements to avail of these grants. It is even possible to get more than one grant if both awarding institutions allow it.

Military service

Though this is not for everyone, those who want to serve the country can avail of the military’s financial benefits in funding college education. Military programs are flexible enough that one can choose to serve either before or after serving.

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