Student loans can be very helpful if you wish to pursue higher education but lack the financial means to do so. However, while they may be a convenient solution, there are some facts about student loans that you need to be aware of before you apply for one. In this article, we will clear any misconceptions or doubts surrounding student loans so that you can clearly understand every facet. This will enable you to make an informed decision regarding your educational plans and finances related to it.

• Similar to how the value of a car is the collateral for your car loan, your capability of earning money in the future is the collateral for your student loan. If you default on the repayment, the lender (which may be a bank or the government) can seek repayment from your Social Security, salary, and also your tax refund, if any. Before applying for a loan, you must determine your return on investment (ROI) and ensure that you are able to repay the debt.
• Many borrowers believe that they cannot refinance their student loans, which is not true. From 2009, the government has permitted borrowers to refinance federal student loans into private ones. When opting for this, you must keep in mind that by refinancing your loan, you may have to forgo special features like forbearance, deferment, and forgiveness programs.
• One of the most misleading facts about student loans is that if a parent has taken the loan, the child needs to make the payments. The crux of the matter is that if a parent has taken the loan, they are responsible for it. If the student is unable to pay, the lender turns to the parent to settle the debt. Additionally, if the parent takes it, their earnings are considered collateral, and students should take their own loans to avoid this.
• An important point to remember is that you have to pay back your student loan whether or not you graduate from college. Repayment is not contingent on finishing your education. You need to repay the debt even when you drop out, which means you should only take a student loan if you intend to obtain a degree and follow through with a college course. Whimsically joining a college with no career goal in mind is not advisable as it will result in debt.
• Finally, you should note that cosigners of student loans are as responsible for it as the student. When the student cannot repay, the cosigner must. In the worst-case scenario, if the student passes away, the cosigner may still have to repay the debt. They may also be called upon to make payments when the student graduates and is making payments every month, but defaults. Also, getting a cosigner release can be hard. The basic rule to follow is that if the cosigner cannot personally take a student loan, they should also not cosign one.