Many people think they can’t get a good education due to how much it costs. Most top schools cost a fortune, but you can afford them with student loans. Learn how to apply for one in the article below.
Understand the grace period of your loan. In order words, find out about when payments are due once you have graduated. Knowing this allows you to make sure your payments are made on time so you can avoid penalties.
Grace Period
Pay attention to how long the grace period is after your graduation before you student loan has to be repaid. For Stafford loans, you should have six months. Perkins loans offer a nine-month grace period. Other kinds of loans may have other grace periods. Know precisely when you need to start paying off your loan so that you are not late.
Figure out what will work best for your situation. You will most likely be given 10 years to pay back a student loan. If that doesn’t work for you, some other options may be out there for you. For example, you might have to take a while to pay a loan back, but that will make your interest rates go up. You can pay a percentage once the money flows in. Some balances pertaining to student loans get forgiven about 25 years later.
Pay off your different student loans in terms of their individual interest rates. Pay off the highest interest rate loan first. Any extra cash you have lying around will help you pay these quicker. Prepayment of this type will never be penalized.
Reduce your total principle by paying off your largest loans as quickly as possible. The less principal you owe overall, the less interest you will end up paying. It is a good idea to pay down the biggest loans first. After the largest loan is paid, apply the amount of payments to the second largest one. By making minimum payments on all of your loans and the largest payment possible on your largest loan, you will systematically eliminate your student loan debt.
Interest Rate
Stafford and Perkins are the best loan options. These are highest in affordability and safety. With these, the interest is covered by the federal government until you graduate. There’s a five percent interest rate on Perkins loans. Subsidized Stafford Loans will have an interest rate that goes no higher than 6.8 percent.
Applying for a private loan with substandard credit is often going to require a co-signer. Make sure you keep every payment. If you don’t do this, your co-signer is liable for those debts.
One form of loan that may be helpful to grad students is the PLUS loan. Normally you will find the interest rate to be no higher than 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. This makes it a great choice for more established students.
Your college may have motives of its own for recommending certain lenders. Some let these private lenders use their name. This is really quite misleading. The school can get a portion of this payment. Be sure you know what a loan is all about before you decide to utilize it.
Do not think that defaulting will relieve you from your student loan debts. The government will come after you. For instance, it can place a claim on your taxes or benefits in Social Security. The government also has the right to claim 15 percent of all your income. In many instances, you’ll wind up in a position that is worse than where you started.
Student Loans
Since school is expensive, you should know about student loans. With the right information and a measure of self restraint, you can navigate the world of student loans successfully. Use the tips wisely whenever you go to fill out those financial aid forms.
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