Student loans are the only vehicle to higher education for some. However, one must understand the drawbacks and benefits before entering into them. The following information will make it easier to make the right decision about funding your education.
Know how long of a grace period is in effect before you must begin to make payments on the loan. This is generally the period after graduation when the payments are due. You can use this time to start saving up for some initial payments, getting you ready to avoid any penalties.
It is acceptable to miss a loan payment if serious extenuating circumstances have occurred, like loss of a job. Most lenders can work with you if you lose your job. Just be aware that doing so may cause interest rates to rise.
Know all of your loan’s details. 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 are three very important factors. To devise a good budget, you must factor all this in.
Don’t panic if you aren’t able to make a loan payment. Unforeseen circumstances such as unemployment or health issues could happen. There are options such as deferments and forbearance that are available with most loans. Just know that the interest will build up in some options, so try to at least make an interest only payment to get things under control.
There is hope for you if you find yourself in a tight financial spot where you cannot keep up with student loan payments. Typically, most lenders will allow you to postpone your payments if you can prove you are having hardships. However, this may negatively affect your interest rate.
If you are in the position to pay down your student loans, make the high interest loans your first priority. If you think you will be better off paying the one with the highest monthly payments first, you may be wrong. Best to look at the interest rates.
Pay off all your student loans using two steps. Always pay on each of them at least the minimum. Second, pay extra on the loan that has the highest interest. This will make it to where you spend less money over a period of time.
Grace Period
Know how much time you have in your grace period from the time you leave school until you must begin paying back your loans. The period should be six months for Stafford loans. It is about nine months for Perkins loans. Other types of student loans can vary. Keep in mind exactly when you’re supposed to start paying, and try not to be late.
Pay attention to how long the grace period is after your graduation before you student loan has to be repaid. Stafford loans typically give you six months. Perkins loans have a nine month grace period. Different loans will be different. Know when you are expected to pay them back, and make your payments on time!
Pick a payment option which best fits your requirements. Most loans have a 10-year repayment 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. You could also make payments based on your income. The balance of some student loans is forgiven after 25 years.
Choose payment options that best serve you. Most student loans allow for repayment over ten years. If this doesn’t work for you, you might have another option. For example, you could extend the amount of time you have to pay, however you will probably have a higher interest rate. You can also do income-based payments after you start earning money. The balances on student loans usually are forgiven once 25 years have elapsed.
Take more credit hours to make the most of your loans. Full-time status is usually 9-12 hours per semester, so getting between 15 and 18 can help you graduate sooner. This helps you keep to aminimum the amount of loan money you need.
Interest Rates
The best federal loans are the Stafford loan and the Perkins loan. They are the safest and are also affordable. With these, the interest is covered by the federal government until you graduate. Interest rate on the Perkins loan is five percent. The subsidized Stafford loan has an interest rate that does not exceed 6.8%.
When you begin to pay off student loans, you should pay them off based on their interest rates. You should always focus on the higher interest rates first. This extra cash can boost the time it takes to repay your loans. Prepayment of this type will never be penalized.
If your credit isn’t the best and you are applying for a student loan, you will most likely need a co-signer. Make every payment on time. If you don’t do this, your co-signer is liable for those debts.
Pay off larger loans as soon as possible. The smaller your principal, the smaller the amount of interest that you have to pay. Concentrate on repaying these loans before the others. Once you pay off one big loan, transfer the payments amounts to the loans with the next highest balances. When you make minimum payments against all your loans and pay as much as possible on the largest one, you can eventually eliminate all your student debt.
Parents and graduate students can make use of PLUS loans. The interest rate won’t be any larger than 8.5%. These rates are higher, but they are better than private loan rates. Therefore, it should be something to consider.
Anyone on a budget may struggle with a loan. A rewards program may help things. Look into something called SmarterBucks or LoanLink and see what you think. They will make small payments towards your loans when you use them.
Do not consider the idea that a default on your student loan will give you freedom from your debt. The federal government will go after that money in many ways. For instance, you might see money withheld from Social Security payments or even your taxes. They can also tap into your disposable income. Most of the time, it will results in a worse financial situation for you.
To get the most out of your student loan dollars, take as many credit hours as possible. As much as 12 hours during any given semester is considered full time, but if you can push beyond that and take more, you’ll have a chance to graduate even more quickly. This helps you minimize the amount of your loans.
When it comes to private student loans, exercise extreme care. It isn’t easy to know what the terms might be. Many times, you will not know until you’ve already signed for them. Then, you may not be able to do much about the situation. Get as much information as you can. If a lender gives you a good offer, see if another lender will match it or do even do better.
Some people sign the paperwork for a student loan without clearly understanding everything involved. If things feel unclear, it is important to get a better understanding of them right away. If you do not do this, you may end up paying more than you should for your education.
You can use your student loan money more efficiently by purchasing meal plans that group meals together instead of charging dollar amounts. You can prevent yourself from getting charged for dining hall extras, since you will just pay a flat fee for every meal you have.
If you wish to get your student loan papers read quickly, be sure that your application is filled out without errors. If you give information that is incomplete or incorrect, it can delay the processing, which means that you could end up unable to begin a semester, putting you half a year behind.
Talk to your lender if you want to gain insight on your loan. You must know all that you can about your loan, and this includes all requirements, possible penalties, etc. Your lender may also be able to provide you with valuable tips for repayment.
Perkins Loan
If you owe a very large amount on a student loan, don’t let it control you with worry. This is something that can be paid back over time. As long as you stay on track with working so that you have money to pay back the loan, you will be in control when it’s time to pay.
The Perkins Loan and the Stafford Loan are both well known in college circles. These have some of the lowest interest rates. This is a good deal because while you are in school your interest will be paid by the government. The interest for a Perkins loan holds at five percent. Subsidized Stafford Loans will have an interest rate that goes no higher than 6.8 percent.
Keep the lines of communication open with your lenders. Make sure you get into touch with them if any of your personal information changes like your email or phone number. In this way, you will know if there are changes in your lender information or the terms of your loan. You must also let them know if you transfer, withdraw, or graduate.
If you have poor credit and are looking for a private loan, you will need a co-signer. Keep your payments up to date. If you miss a payment, you will saddle your co-signer with the debt.
Investigate all your choices for repayment options to make sure you stay current with them. It is very important that you make your payments on time to protect your credit rating and prevent having trouble with garnished wages. If you find that paying back these student loans is difficult, you might want to think about debt consolidation.
Many students wouldn’t be in college if they had not gotten a student loan. Sadly, few can afford an education without it. Use the above material as a resource so that you can stay on track.
To get more returns from student loans, try taking online classes along with classes in a college building. This will let you add a few hours to your load while still scheduling the work around other classes or your job. This gets you the most hours per semester.