Student loans play a critical role in the acquisition of higher education, but when unwisely obtained, they can produce real hardships. Educating yourself on the process is important. Continue reading to understand what you should know before borrowing.
Always know all of the key details of any loan you have. You need to stay on top of your balances, your lenders and the repayment status in which you find yourself at any given time. These details all affect loan forgiveness and repayment options. This will allow you to budget effectively.
Remain in contact with your lender. Make sure they know your current address and phone number. Do not put off reading mail that arrives from the lender, either. You should take all actions immediately. If you don’t do this, then it can cost you in the end.
Don’t get too stressed out if you have trouble when you’re repaying your loans. Job losses or unanticipated expenses are sure to crop up at least once. There are forbearance and deferments available for such hardships. Make sure you realize that interest will keep building, so think about making at least interest payments so that you can keep balances from growing out of control.
If you are in the position to pay down your student loans, make the high interest loans your first priority. If you base your payment on which loans are the lowest or highest, there is a chance that you will end up owing more money in the end.
Grace Period
Know how long you have between graduation and the commencement of loan payments. Six months is usually the length for Stafford loans. For Perkins loans, the grace period is nine months. Make sure to contact your loan provider to determine the grace period. Be sure you know exactly when you will be expected to begin paying, and don’t be late!
Choose a payment option based on your circumstances. Many loans offer a ten year payment plan. If this won’t work for you, there may be other options available. For example, you might take a long time to pay but then you’ll have to pay a lot more in interest. Another option some lenders will accept is if you allow them a certain percentage of your weekly wages. Sometimes student loans are forgiven after 25 years.
To expedite the process of a student loan, make sure the application is filled out accurately. Incorrect or inaccurate information will only delay the process, and that may result in your schooling pushed back to the following semester.
Stafford Loan
The best federal loans are the Stafford loan and the Perkins loan. They are the safest and most economical. These are good loans because the government pays the interest while you are still in school. The Perkins loan has an interest rate of 5%. On a subsidized Stafford loan, it will be a fixed rate of no larger than 6.8 percent.
If you have poor credit and are looking for a private loan, you will need a co-signer. Staying on top of your payments is essential. Otherwise, the other party must do so in order to maintain their good credit.
Get rid of thinking that defaulting on a loan means freedom. Unfortunately if you do this, the federal government will use all means necessary to recover this debt. They can take your income taxes or Social Security. They can also take money out of your paycheck. Most of the time, not paying your student loans will cost you more than just making the payments.
Heed caution when dealing with private loans. These can be tricky when it comes to the specifics surrounding the terms. Often, you don’t know until you have already signed on the dotted line. You may then find yourself in a very bad financial predicament. Learn about them in detail before selecting one. If you receive any individual great offer, use it to see if other lenders might compete with it.
In conclusion, you need to know as much as possible about student loans before getting one. The choices you make now can have big implications on your life, even well after you graduate from school. You want to make wise borrowing choices so heed this advice.
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