Student loans are a valuable option for you in college. So, the time to educate yourself about this topic is prior to signing on the dotted line. The advice that follows is a good starting point.
Do know that you are probably going to have a post-graduation grace period from your student loans before you are required to start making payments back. The grace period is the time you have between graduation and the start of repayment. When you have this information in mind, you can avoid late payments and penalty fees.
Always figure out what the details of the loans you have out are. You need to know how much you owe, your repayment status and which institutions are holding your loans. These details are imperative to understand while paying back your loan. This also helps when knowing how prepare yourself when it comes time to pay the money back.
Don’t panic if you cannot make your payments on your student loans. Emergencies are something that will happen to everyone. There are options like forbearance and deferments for most loans. Remember that interest accrues in a variety of ways, so try making payments on the interest to prevent balances from rising.
Utilize a methodical process to repay loans. First, ensure you meet the minimum monthly payments on each separate loan. Second, if you have any extra money, use it to make extra payments on the loan that bears the higher interest rate rather than the one that bears the highest balance. It’ll help limit your spend over a given time.
Grace Period
You are offered a grace period after you graduate before you must start paying on your student loans. Stafford loans have a grace period of six months. Perkins loans have a nine month grace period. Other types of loans may vary. Make sure you know how long those grace periods are, and never pay late.
Get a payment option that works for you. Most student loans have a ten year plan for repayment. You may be able to work a different plan, depending on your circumstances. For instance, you might have an option of paying over more years at the trade-off of higher interest. You may be able to make your payments based on percentage of your income after you get a job. After 25 years, some loans are forgiven.
When repaying student loan obligations, prioritize them by interest rate. Pay loans with higher interest rates off first. Make extra payments so you can pay them off even quicker. Paying quicker than expected won’t penalize you in any way.
Lower your principal amounts by repaying high interest loans first. You will reduce the amount of interest that you owe. Focus on the big loans up front. When you pay off one loan, move on to the next. Making your minimum payments on every loan, and the largest you can on your most expensive one, can really help you get rid of student loan debt.
For those on a budget already stretched to the max, the idea of a student loan can be scary. Loan rewards programs can help a little with this, however. Check out programs from Upromise such as SmarterBucks and LoanLink. These are similar to other programs that allow you to earn cash back. You can use this money to reduce your loan.
Increase your credit hours if possible. You may be able to scrape by with 12 hours, but try to at least carry 15 per semester. If possible, go for 18. This lets you minimize the loan amounts you have to accrue.
Fill out your paperwork the best that you can. If you fail to fill out the forms correctly, there might be delays in financing that can postpone your education.
Stafford Loans
The Perkins and Stafford loans are the most helpful federal loans. They are cheap and safe. They are a great deal because the government pays the interest on them during the entirety of your education. The interest for a Perkins loan holds at five percent. On subsidized Stafford loans it is fixed at a rate no greater than 6.8%.
When applying for private loans without good credit, you will need a cosigner. It is vital you keep current with all your payments. If not, the cosigner is accountable for your debt.
One form of loan that may be helpful to grad students is the PLUS loan. The interest isn’t more than 8.5%. It’s higher than public loans, but lower than most private options. For this reason, this is a good loan option for more mature and established students.
Your school could be biased toward certain lenders. They may have a deal with a private lender and offer them use of the school’s name. This can be very misleading. Sometimes a school will have worked out a financial deal with a lender if you choose to use them. Know what is going on before you sign.
Always stay connected to your lenders. You can learn about changes or issues that way. Also, you can get great advice from your lender.
Consider finding a part time job on campus to supplement your income. This will assist your overall finances and reduce the amount of money you must borrow.
If you’re not going to be able to make your payment, you should get a hold of the lender you’re using as soon as you can. The lender will be more likely to assist you if your payment is current. You may be able to arrange a deferral or reduced payments.
After reading the above article you should now be aware of the different types of student loans available to you. The choices made now can affect your life for years to come. Be a smart borrower.
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