by Ellie Copper

Created on: December 02, 2008

Student loans. For many, its a make it or break it reality when it comes down to financing their education. Many students are afraid of those hefty loans. After all, a college education isn't cheap. Even with some scholarships and federal aid, these steps won't cover the full costs of a 4 year education. This is where the student loan comes in.

So, you get your loan and you have a co-signer who is nice enough to put their neck out on the line for you to get a better rate. That's wonderful. They are risking the possibility of bad credit for your good name. Not everyone is so lucky. Some will be forced to take out a loan that is at a higher rate because they didn't have the luxury of a co-signer. No matter how you get your loan, let's say you have it. You are accumulating "good credit". It's a slow process with student loans, because you don't see the benefits of an education until after graduation, when you start paying the loan company back. So, for right now, it's just numbers floating over your head, getting bigger and bigger, day by day. It's just what student loans do.

Now, a lot of freshmen make the same mistake their first year. They sign up for one of those high interest credit cards during orientation so they can get that nifty free gift. They make the promise to themselves that they won't use it unless it is an emergency. Then the emergencies become more frequent and the bill comes in the mail. Students usually don't have well paid jobs. They make things work for awhile, but then their friends decide to take a trip and that credit card is used for everything. In a month or so, that minimum payment you've been making shoots up. Your late with one payment, than you completely miss the next. Your rate on your card jumps even higher, while you make payments that will only cover a small percent of the principle and a nice chunk of the interest.

The thing with student loans is that you aren't guaranteed that the same loan company will give you a loan for your second year. Student loans go one year at a time. You may have had good or no credit prior to your first year as a college student, but if you had bad credit, chances of getting a student loan without a co-signer (and some cases with a co-signer) are very slim. Even that mishap with forgetting to pay your bill could affect your next years loan. If your lucky, they'll just make your rate higher. I have seen students declined for loans just a month prior to their first day of the new school year. There isn't much you can do once you are declined for a student loan. If its your only way of paying for college, you are down the river in a barrel with no paddle.

Student loan companies take their chances enough when it comes to giving loans to those with no credit and a co-signer. They aren't going to risk loaning to someone with bad credit.

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