Student loans can be the key to getting the college degree that you dream of, but they can also become a nightmare if you don’t borrow wisely. So educating yourself about student loans is best done before you sign on that line. Read on to learn all you can before borrowing.
Don’t panic if you can’t make a payment due to job loss or another unfortunate event. The lenders can postpone, and even modify, your payment arrangements if you prove hardship circumstances. However, this may negatively affect your interest rate.
Never panic when you hit a bump in the road when repaying loans. Anything can come up and interfere with your ability to pay, such as a medical emergency or getting laid off from work. Lenders provide ways to deal with these situations. Remember that interest accrues in a variety of ways, so try making payments on the interest to prevent balances from rising.
Work hard to make certain that you get your loans taken care of quickly. First, make sure you are at least paying the minimum amount required on each loan. Next, pay as much as you can into the balance on the loan which has the greatest interest rate. This will cut back on the amount of total interest you wind up paying.
Think about what payment option works for you. Most student loans have a ten year plan for repayment. If this does not fit your needs, you may be able to find other options. Understand if you choose a longer repayment period you will end up having to pay more in interest. You might even only have to pay a certain percentage of what you earn once you finally do start making money. Some loans are forgiven in 25 years.
Choose the right payment option for you. In most cases, 10 years are provided for repayment of student loans. If you don’t think that is right for you, look into other options. You could extend the payment duration, but you’ll end up paying more. You might also be able to pay a percentage of your income once you begin making money. It may be that your loan will be forgiven after a certain period of time as well.
Anyone on a strict budget who is facing the repayment of a student loan is put in a difficult situation. However, loans that offer a rewards program can soften the blow. For instance, look into the Upromise programs called SmarterBucks and LoanLink. These are similar to cash back programs in which you earn rewards for each dollar you spend, and you can apply those rewards toward your loan.
You can stretch your dollars further for your student loans if you make it a point to take the most credit hours as you can each semester. While 9 to 12 hours each semester is full time, you may be able to get 15 to 18 which can help you to graduate faster. This helps you shave off some of the cost of your loans.
Perkins Loan
Two superior Federal loans available are the Perkins loan and the Stafford loan. These are both safe and affordable. This is a good deal because while you are in school your interest will be paid by the government. The interest for a Perkins loan holds at five percent. The interest rate on Stafford loans that are subsidized are generally no higher than 6.8 percent.
If your credit isn’t the best and you are applying for a student loan, you will most likely need a co-signer. Keep your payments up to date. Otherwise, the other party must do so in order to maintain their good credit.
PLUS loans are something that you should consider if graduate school is being funded. The PLUS loans have an interest rate below 8.5%. This rate exceeds that of a Perkins loan or a Stafford loan, but is lower than private lenders offer. Therefore, this kind of loan can be useful for students who are older.
Defaulting on a loan is not freedom from repaying it. The government has multiples ways to collect on debt. For example, they can claim a little of a tax return or even a Social Security payment. The government can also lay claim to 15 percent of your disposable income. You could end up worse off in some circumstances.
As you now know, there are many things you should consider about student loans. These choices can affect you for years. It’s best to borrow wisely, so be mindful of all that you learned from this article.
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