Are Loans a Good Idea?

Student loans are a reality of 21st century higher education. Many financial aid packages contain at least one federal educational loan. In addition, there are a growing number of educational loans funded by private banks and lending institutions available to help you and your family pay for college expenses. Remember, education appreciates in value. Used wisely, loans are an investment in your future that provide dividends for life!

Here are a few facts about loans:

• You are obligated to begin payback on your loans after you leave college or cease to be enrolled at least half-time.
• Loan interest accrues as you attend college and must be repaid in addition to the original amount of the loan (principal) after you leave college. If you receive a Perkins Loan or a Subsidized Stafford Loan, the Federal Government pays the interest while you are in college.
• A repayment schedule of regular monthly installments is set (typically 120 months) with some allowance for adjustments due to illness, disability, and unemployment. Your repayment performance will affect your credit rating. Be sure to contact your loan agency if you experience hardship.
• You can extend your loan's repayment period and reduce your monthly payments. However, this means more money is spent repaying the loan due to the loan's accruing interest.
• You may borrow from more than one loan program at the same time to meet your college expenses.

If you use loans to help pay for college, borrow only what you need to cover expenses. We estimate that Northwest Christian University graduates borrow, on average, an amount equivalent to one year's cost of education. Follow the 8% rule. It is recommended that your debt burden not exceed 8% of what your annual earnings will be after graduation.