Offers for student loans can start arriving in your mail even before you graduate high school. You might think such offers a blessing if the costs of college are freaking you out. In the end, you have to know what you’re doing before you pick any one loan.
Don’t be scared if something happens that causes you to miss payments on your student loans. Most lenders will let you postpone payments when experiencing hardship. However, you may pay an increase in interest.
Consider private funding for your college education. Though federal loans are common, competition in the market does exist. Private loans are often more affordable and easier to get. Check out this type of funding in your community, and you might get enough to cover your books for one semester or maybe even more.
Know how much time your grace period is between graduating and when you need to start paying back loans. Stafford loans typically allow six months. It is about nine months for Perkins loans. There are other loans with different periods. It is important to know the time limits to avoid being late.
Choose a payment plan that you will be able to pay off. A lot of student loans let you pay them off over a ten year period. If you don’t think that is feasible, you should check for alternatives. For instance, you might be able to get a longer repayment term, but you will pay more in interest. It may also be possible for you to dedicate a portion of your salary to loan repayment once you have a regular paycheck coming in. After 25 years, some loans are forgiven.
Pay off student loans in interest-descending order. Pay loans with higher interest rates off first. Paying a little extra each month can save you thousands of dollars in the long run. There is no penalty for repaying sooner than expected.
Perkins Loan
The Perkins loan and the Stafford loan are the most desirable federal programs. They are the safest and least costly loans. They are a great deal because you will get the government to pay your interest during your education. The interest for a Perkins loan holds at five percent. The Stafford loan only has a rate of 6.8 percent.
If you apply for a private student loan and your credit is not that great, you are going to need someone to co-sign for you. Keep your payments up to date. If you default, your cosigner will be responsible for the payments.
PLUS loans are something that you should consider if graduate school is being funded. Normally you will find the interest rate to be no higher than 8.5%. These rates are higher, but they are better than private loan rates. That is why it’s a good choice for more established and prepared students.
Your school could have an ulterior motive for recommending you pursue your loan through particular lenders. Many institutions allow selected private lenders to use the school name in their promotions. This is really quite misleading. Sometimes a school will have worked out a financial deal with a lender if you choose to use them. Make sure you grasp the subtleties of any loan prior to accepting it.
Banish the notion that defaulting on your student loans means freedom from debt. There are several ways the government can get their money. For instance, it can claim portions of Social Security or tax return payments. In addition, they can garnish your wages and take a significant portion of your take home pay. In many instances, you’ll wind up in a position that is worse than where you started.
Double-check your application for financial aid to ensure that it is free of errors. It can really affect what you’ll be offered if you file in error. If there is any doubt in your mind that you filled it out right, you should consult a financial aid rep at your school.
Look into meal plans that let you pay per meal. This will eliminate price gouging for extra dining money since it’s just a flat fee for every meal.
Get an on-campus to help you make ends meet. This way you’ll be able to make your education easier to pay for instead of getting a loan, and in the end you’ll have some pocket money for anything you want.
Starting college means making important decisions, but none are quite as important as thinking about the debt you are about to take on. Borrowing excessively at high interest rates can cause serious problems. Keep in mind all that you read here as you prepare for both college and the future.
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