Student loans are helpful, but if you don’t know what to look for, they can turn into a nightmare. That is why you need to know all about student loans before getting one. Keep reading for the information you need.
Stay in communication with all lenders. Make sure you let them know if your contact information changes. Also, be sure you immediately read any kind of mail you get from a lender, whether it’s electronic or paper. If the correspondence requests you take an action, do so as soon as you can. Missing an important piece of mail can end up costing a great deal of money.
Find out when you must begin repayments. This is the period of time after your graduation before your payment is due. Knowing this can help you avoid hefty penalties by paying on time.
Don’t worry if you can’t pay a student loan off because you don’t have a job or something bad has happened to you. Generally speaking, you will be able to get help from your lender in cases of hardship. Just know that taking advantage of this option often entails a hike in your interest rates.
Make it a point to be aware of all the important facets of your student loans. Know your loan balance, your lender and the repayment plan on each loan. These are three very important factors. This information is necessary to plan your budget accordingly.
If you have trouble repaying your loan, try and keep a clear head. Unforeseen circumstances such as unemployment or health issues could happen. Realize that there are ways to postpone making payments to the loan, or other ways that can help lower the payments in the short term. Interest continues to compound, however, so a good strategy is to make interest only payments that will prevent your balance from getting bigger.
Don’t worry if you can’t make a payment on your student loan due to a job loss or another unfortunate circumstance. Many times a lender will allow the payments to be pushed back if you make them aware of the issue in your life. However, you may pay an increase in interest.
You are offered a grace period after you graduate before you must start paying on your student loans. For example, you must begin paying on a Stafford loan six months after you graduate. It is about nine months for Perkins loans. There are other loans with different periods. Make certain you are aware of when your grace periods are over so that you are never late.
Begin Paying
Go with the payment plan that best fits what you need. The majority of student loans have ten year periods for loan repayment. There are many other options if you need a different solution. For instance, it may be possible to extend the loan’s term; however, that will result in a higher interest rate. You also possibly have the option of paying a set percentage of your post-graduation income. Some student loan balances are forgiven after twenty five years has passed.
Know how much time you have in your grace period from the time you leave school until you must begin paying back your loans. For example, you must begin paying on a Stafford loan six months after you graduate. Perkins loans enter repayment in nine months. Different loans will be different. Do you know how long you have?
If you don’t have a lot of “extra” money, student loans can really make life difficult for you. You can make things a bit easier with help from loan rewards programs. For instance, look into the Upromise programs called 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.
Identify and specifically choose payment options that are suited to your personal circumstances. Many loans allow for a 10 year payment plan. If that isn’t feasible, there could be alternatives. For instance, you may pay back within a longer period of time, but it will be with higher interest rates. Additionally, some loans offer a slightly different payment plan that allows you to pay a certain percent of your income towards your debt. There are some student loans that will be forgiven if you have not got them paid in full within 25 years.
Perkins and Stafford are some of the best federal student loans. They tend to be affordable and entail the least risk. This is a good deal because while you are in school your interest will be paid by the government. Perkins loans have an interest rate of 5%. Subsidized Stafford loans offer interest rates no higher than 6.8 percent.
Making monthly payments is often difficult for those whose budget is tight. A rewards program may help things. Check out programs from Upromise such as SmarterBucks and LoanLink. This can help you get money back to apply against your loan.
PLUS student loans are offered to parents and graduate students. Normally you will find the interest rate to be no higher than 8.5%. This is higher than Stafford loans and Perkins loans, but it is better than rates for a private loan. Therefore, it should be something to consider.
It is easy to simply sign for a student loan without paying attention to the fine print. You must, however, ask questions so that you know what is going on. This is a simple way for the lender to receive a bit more money than they are entitled to.
Your school could have an ulterior motive for recommending you pursue your loan through particular lenders. Some schools let private lenders use their name. This can lead to misunderstandings. The school could benefit if you go with particular lenders. Make sure that you are aware of all the stipulations involved in a loan prior to taking it.
Fill out paperwork for student loans with great accuracy to facilitate quick processing. If you give them information that isn’t right or is filled with mistakes, it can mean the processing will be delayed. This can put you a whole semester behind!
Going into default on your loans is not a wise idea. The government has many ways to get the money. They can take this out of your taxes at the end of the year. In addition, they can garnish your wages and take a significant portion of your take home pay. You will probably be worse off than before in some cases.
You have a lot of information now on student loans to digest. Your decisions can benefit you or haunt you forever. These tips will ensure you borrow intelligently.
Take extra care with private loans. It may be challenging to find the terms. Oftentimes, you aren’t aware of the terms until after you have signed the papers. You may not be able to get out of the loan then. Get all the necessary information. If a good offer comes your way, ask other loan providers if they can match or beat it.