Used to be, student loans were a safe, relatively low-pressure introduction to the world of credit and loans for many people. Today, economic problems and the credit crunch have influenced student loan trends.
It’s practically impossible to miss what’s been going on in the economy for the past few years. Many of the factors affecting our financial health are also affecting how easy it is to get – and repay – student loans.
Like virtually every other type of loan, student loans are now more linked to your credit than ever before. Just as those with good credit histories and scores are better positioned to get mortgages and vehicle loans, good credit counts when you’re applying for a student loan.
Many college-age kids will have little or no credit history to rely on. In those cases, a parent’s credit history may help the student secure a loan if the parent is willing to co-sign. Regardless of whose credit status is on the line, it pays to review your credit report and know your credit score before applying for a student loan.
During the height of the financial crisis, the number of student lenders dropped drastically. Now, more lenders are offering student loans, but competition remains fierce and you need every edge available to secure the best loan terms and rates.
Repaying a student loan has, historically, been easier than paying back other types of loans. While repayment terms may be more relaxed – for example, you won’t have to start repaying until you’ve graduated – late payments or defaulting on a student loan will still affect your credit score.
Student loan trends change constantly and keeping on top of them can be a challenge. The Internet is a great resource for learning more about student loans, and you might consider working with a professional who helps match families and lenders.