Taking out student loans may be imperative to your financial plan for college. For many of them, there is also a sense of dread that accompanies the process. Luckily, the advice below will help you with the process.
Be aware of the grace period that you have before you have to pay back your loan. This is the amount of time you are allowed after graduation before you loan becomes due. When you know what it is, you will have time to make a payment plan that will help you pay on time without penalties.
Understand the grace period of your loan. This is the amount of time you have before the lender will ask that your payments need to start. Knowing this will give you a head start on getting your payments in on time and avoiding hefty penalties.
Stay in touch with your lending institution. Anytime there are changes to your personal information such as where you live, phone number, or email, it is important they are updated right away. Read all letters which you are sent and emails, too. If the correspondence requests you take an action, do so as soon as you can. Missing anything in your paperwork can cost you valuable money.
Never do anything irrational when it becomes difficult to pay back the loan. Health emergencies and unemployment are likely to happen sooner or later. Most loans will give you options such as forbearance and deferments. Just remember that interest keeps accruing in many forms, so try to at least make payments on the interest to keep the balances from increasing.
Don’t worry if you can’t make a payment on your student loan due to a job loss or another unfortunate circumstance. A lot of the time a lender will allow a payment to be postponed if you show them you’re having a hard time. Just know that taking advantage of this option often entails a hike in your interest rates.
If you are considering paying off a student loan early, start with the loans with high interest rates. If you get your payments made on the loans that have the lowest or the highest, it can cost you extra in the end.
Don’t discount using private financing to help pay for college. Student loans are known to be plentiful, but there is so much competition involved. Private student loans are far less tapped, with small increments of funds laying around unclaimed due to small size and lack of awareness. Check your local community for such loans, which can at least cover books for a semester.
Grace Period
Never do anything irrational when it becomes difficult to pay back the loan. Unforeseen circumstances such as unemployment or health issues could happen. There are forbearance and deferments available for such hardships. The interest will grow if you do this though.
Keep in mind the time that’s allotted to you as your grace period from when you get out of school until you have to start paying back the loan. Six months is usually the length for Stafford loans. Perkins loans offer a nine month grace period. Other loans vary. Make sure that you are positive about when you will need to start paying and be on time.
Be sure you select the right payment plan option for you. Many loans offer a decade-long payment term. Other options are likely to be open to you if this option does not suit your needs. For instance, you could be given more time but have to pay more interest. Additionally, some loans offer a slightly different payment plan that allows you to pay a certain percent of your income towards your debt. It may be the case that your loan is forgiven after a certain amount of time, as well.
Select the payment arrangement that is best for you. Many loans allow for a 10 year payment plan. There are many other options if you need a different solution. You might get more time with higher interest rates. You may be able to make your payments based on percentage of your income after you get a job. There are some student loans that will be forgiven if you have not got them paid in full within 25 years.
Choose the right payment option for you. Many student loans come with a ten year length of time for repayment. If this won’t do, then there are still other options. For instance, you can spread your payments out over more time, but this will increase your interest. Some student loans will base your payment on your income when you begin your career after college. It’s even the case that certain student loans are forgiven after a certain time period, typically 25 years.
Student loans are often necessary and important to the college process. After reading this information, you can make a good choice about finding a loan. Use what you’ve just learned to make wise student loan decisions.
For those on a budget already stretched to the max, the idea of a student loan can be scary. There are loan rewards opportunities that 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.