Free Credit Report?

My favorite song from a TV commercial has repeating lyrics that sing "Free Credit Report Dot Com." This catchy jiggle apparently works because I visited the website today. There are many reasons to check your credit report and it really is a good idea for anyone who is preparing to take out a student loan. Most banks and private organizations offer better loan rates to people that have a clean credit history.

As far as Free Credit Report dot com, the name is slightly misleading. The report is in fact, not free. It seems they spent so much on the theme song that to obtain a credit report you need to sign up for Triple Advantage Credit Monitoring, a $14.95 monthly fee. If you do not want the monthly fee they also have an option to purchase a report from the three major reporting companies, Experian, Equifax and TransUnion for around $40.

There is no reason to pay to see these reports however. The Fair Credit Reporting act requires the major reporting companies to provide a free copy of your credit report at least once a year. You can access this report simply by going to annualcreditreport.com which really is a free service. The only thing they will make you pay for is to find out what your actual "credit score" is. This number is a rating that the reporting companies derive after studying your borrowing and repayment history.

What does unsubsidized mean?

The biggest and most important difference between a subsidized and an unsubsidized student loan is that the Federal Government does NOT pay for the interest that accrues on your unsubsidized loans. This type of loan is "non-need" based as calculated by the Free Application For Student Aid (FAFSA). Unsubsidized loans are often given to students who's parents make a moderate yearly income yet may have multiple children in college and therefore cannot pay the full price of tuition for their children.

The terms that have been negotiated with your provider will determine what will happen with the interest that will add up while you are in college. There are some cases where interest must be paid on a monthly basis beginning with the first disbursement of the loan. More commonly, the interest will be capitalized (added to the principle). This means that a 10,000 dollar loan at 6.8% interest over a 4 year period will actually cost the borrower $13,009.

Overall, the relatively low interest rate on these loans is far outweighed by the benefits of attaining a college diploma. The average yearly income of those with college degrees will more than cover the cost of these loan and the college experience is virtually priceless itself.