Student loans are what people can use to get an education they wouldn’t have been able to afford otherwise. That said, you can’t get a loan without adequate knowledge. This piece will help make your education and finance decisions easier.
Keep in mind that there’s a grace period to follow before it’s time to pay a loan back. This usually means the period of time after graduation where the payments are now due. Having this information will help you avoid late payments and penalties.
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. In order words, find out about when payments are due once you have graduated. Knowing this will give you a head start on getting your payments in on time and avoiding hefty penalties.
Know the specifics about your loan. You must watch your balance, keep track of the lender, and monitor your repayment progress. All these details are involved in both repayment options as well as forgiveness potentials. It is your responsibility to add this information into your budget plans.
If you have trouble repaying your loan, try and keep a clear head. Job loss and health crises are bound to pop up at one point or another. Virtually all loan products offer some form of a forbearance or deferment option that can frequently help. Just be mindful that interest continues to accrue in many options, so at least consider making interest only payments to keep balances from rising.
Stay in touch with the lender. Make sure you let them know if your contact information changes. Anytime you receive a phone call, email or paper letter from your lender, pay attention to it as soon as it is received. Do whatever you need to as soon as you can. Neglecting something may cost you a fortune.
Grace Period
Utilize a methodical process to repay loans. Always pay on each of them at least the minimum. Second, pay anything extra to the loan with the highest interest rate, not the one with the highest balance. This will cut down on your liability over the long term.
When you graduate, know how much time you have before you have to start making payments on your loans. Stafford loans have a grace period of six months. Perkins loans offer a nine month grace period. Other types of loans may vary. Understand when your first payments will be due so that you can get on a schedule.
If you’re considering repaying any student loan ahead of time, focus on those with the largest interest. If you pay off the wrong loans first, you could end up paying more than you need to.
Paying off your biggest loans as soon as you can is a sound strategy towards minimizing your overall principal. This will reduce the interest you must pay back. Focus on paying off big loans first. Once a large loan has been paid off, transfer the payments to your next large one. If you make at least the minimum payment on all loans and large payments on the biggest loan, your student loan balances will disappear.
Choose your payment option wisely. The ten year repayment plan for student loans is most common. There are other options if you can’t do this. For example, you might be given a longer time to pay. Keep in mind that this option comes with higher interest. You may be able to make your payments based on percentage of your income after you get a job. Some balances are forgiven if 25 years have passed.
You may feel overburdened by your student loan payment on top of the bills you pay simply to survive. There are loan rewards opportunities that can help. For example, you can look at SmarterBucks or LoanLink programs from Upromise. This can help you get money back to apply against your loan.
Select the payment option best for your particular needs. The average time span for repayment is approximately one decade. There are other options if this doesn’t work. You could choose a higher interest rate if you need more time to pay. Another option would be a fixed percentage of your wages when you get a job. Some loans are forgiven after a 25-year period.
Many people will apply for their student loans without reading what they are signing. You must ask the right questions to clarify what you don’t understand. Otherwise, you could have much more debt than you were counting on.
Look to pay off loans based on their scheduled interest rate. The loan with the individual highest rate needs paid down fastest and first. This extra cash can boost the time it takes to repay your loans. There is no penalty for early repayment.
Perkins Loans
For those on a budget already stretched to the max, the idea of a student loan can be scary. Rewards programs can help. For examples of these rewards programs, look into SmarterBucks and LoanLink from Upromise. This can help you get money back to apply against your loan.
Stafford and Perkins loans are the most advantageous federal loans to get. They tend to be affordable and entail the least risk. One of the reasons they are so popular is that the government takes care of the interest while students are in school. Perkins loans have an interest rate of 5%. On a subsidized Stafford loan, it will be a fixed rate of no larger than 6.8 percent.
Be sure to fill your student loan application correctly. If you make a mistake, it will take longer to go through. You may not see any money for an entire semester.
Student loans make it much easier for students to afford a college education. But, if you don’t understand what goes into getting a good student loan, it can cause you trouble in the future. Use the material you just read to make the right choices.
If you are in graduate school, a PLUS loan may be an option. The PLUS loans have an interest rate below 8.5%. This is a bit higher than Perkins and Stafford loans, but the rates are better for private loans. This means that this is a suitable choice for students who are a bit older and better established.
