Student loans generally begin showing up in your mailbox before you even graduate from high school. You may be happy to have all these offers of financial help. But, you need to tread carefully as you explore student loan options.
Make it a point to be aware of all the important facets of your student loans. You need to be able to track your balance, know who you owe, and what your repayment status is. These are three very important factors. You have to have this information if you want to create a good budget.
Pay your loan off in two steps. Make sure you pay the minimum amount due each month. Pay extra on the loan with the highest interest rate. This will keep your total expenditures to a minimum.
Don’t panic if you have a slight hiccup when paying back your loans. Job loss and health crises are bound to pop up at one point or another. Do know that you have options like deferments and forbearance available in most loans. The interest will grow if you do this though.
Month Grace Period
It is important to know how much time after graduation you have before your first loan payment is due. Stafford loans offer a period of six months. For Perkins loans, you have nine months. There are other loans with different periods. Understand when your first payments will be due so that you can get on a schedule.
Check the grace period of your student loan. Stafford loans provide a six month grace period. A Perkins loan gives you a nine month grace period. Other loan types are going to be varied. Know precisely when you need to start paying off your loan so that you are not late.
For those on a budget already stretched to the max, the idea of a student loan can be scary. You can minimize the damage a little with loan reward programs. Places to check out are SmarterBucks and LoanLink which are programs available from Upromise. These work like cash back programs, and the money you spend earns rewards that can be applied toward your loan.
Pick a payment option that works bets for you. Many student loans will offer a 10 year repayment plan. If this does not appear to be feasible, you can search for alternative options. You could choose a higher interest rate if you need more time to pay. Therefore, you should pay it once you make money. Some loans are forgiven after a 25-year period.
Lots of people don’t know what they are doing when it comes to student loans. Make certain that you understand all of the facts before signing the dotted line. This is a simple way for the lender to receive a bit more money than they are entitled to.
Monthly student loans can seen intimidating for people on tight budgets already. Loan rewards programs can help a little with this, however. Look at the SmarterBucks and LoanLink programs that can help you. These are similar to other programs that allow you to earn cash back. You can use this money to reduce your loan.
The Perkins loan and the Stafford loan are the most desirable federal programs. These are the most affordable and the safest. These are great options because the government handles your interest while you are in school. The interest for a Perkins loan holds at five percent. On the subsidized Stafford loan, it’s fixed at no higher than 6.8%.
Many obtain student loans, sign their documents, but remain clueless about what they’re signing into. Make certain that you understand all of the facts before signing the dotted line. This is a simple way for the lender to receive a bit more money than they are entitled to.
Bad credit will mean you need a cosigner on a private loan. It’s imperative that you make your payments on time. If you’re not able to, then the co-signer is going to be responsible for the debt you have.
Fill in all of the spaces on your application, otherwise, you may run into delays. If you fail to fill out the forms correctly, there might be delays in financing that can postpone your education.
Keep in mind that your school could have other motivations when they recommend certain lenders. Schools sometimes allow lenders to refer to the name of the school. This can be very misleading. The school might get money if you choose a particular lender. Make sure to understand all the nuances of a particular loan prior to accepting it.
If your credit is sub-par, you might need a co-signer for private student loans. It is very important that you keep up with all of your payments. If you don’t, the person who co-signed is equally responsible for your debt.
Get rid of the notion that by defaulting on a loan it will get you out of debt. The government will often still get its money back anyway. For example, it can step in and claim a portion of your tax return or Social Security payments. The government may also try to take up around 15 percent of the income you make. This can become financially devastating.
One type of student loan that is available to parents and graduate students is the PLUS loans. They have a maximum interest rate of 8.5 percent. This is a bit higher than Perkins and Stafford loans, but the rates are better for private loans. These loans are much better suited to an older student that is at graduate school or is close to graduating.
Be sure to double check all forms that you fill out. If you do not fill it out correctly, you may not get as much money from the school. Talk to a financial aid representative for more advice on the process.
Rid your mind of any thought that defaulting on a student loan is going to wipe the debt away. The government will come after you. They can take money off your tax refund, for example. They can also claim up to fifteen percent of your income that is disposable. In a lot of cases, you’ll be in a worse place than you already were.
To make sure that your student loan dollars go as far as possible, buy a meal plan that goes by the meal rather than the dollar amount. This way you won’t get charged extra and will only pay one fee per meal.
Be careful when it comes to private student loans. It can be difficult to figure out what the terms are exactly. You may find it difficult to navigate through it all until after you are already stuck. This makes it hard to learn about your options. Get all the necessary information. If you think you want to take on a loan, make sure you “comparison shop” to ensure it is really a good deal.
Keep in touch with your lender or whoever is giving you the money. This is something you have to do so you know what your loan is all about and what you have to do to pay the loan back later on. Your lender will prove to be invaluable should you need more information.
Understanding loans is critical to the college experience. If you borrow a lot of money at a high rate of interest, you will have a debt burden for a long time. Keep this material in mind as you launch your adventures in higher education.
Understand what options you have in repaying your loan. If it’s going to be hard for you to survive after graduation, think about acquiring graduated payments. Your payments will be smaller and will increase later on.