As you approach your last year of high school, you may notice offers for loans arrive in the mail. You might see it as a blessing to have so many options. But before you incur all that debt, you must know some things.
Verify the length of your grace period before repayment of your loan is due. In order words, find out about when payments are due once you have graduated. This can also give you a big head start on budgeting for your student loan.
Verify the length of the grace specified in the loan. 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.
Be sure you understand the fine print of your student loans. You need to know how much you owe, your repayment status and which institutions are holding your loans. These details are imperative to understand while paying back your loan. Budgeting is only possible with this knowledge.
Always be aware of what all the requirements are for any student loan you take out. Keep a running total on the balance, know the repayment terms and be aware of your lender’s current information as well. These details are going to have a lot to do with what your loan repayment is like and if you can get forgiveness options. This is must-have information if you are to budget wisely.
Maintain contact with your lender. Always let them know anytime your personal information changes, because this happens quite a bit when you’re in college. It is also important to open and thoroughly read any correspondence you receive from your lender, whether it is through traditional or electronic mail. If any requests are made or important stipulations are shared with you, act on them right away. If you miss important deadlines, you may find yourself owing even more money.
Stay in contact with your lender. Make sure they always know your address, phone number and email, all of which can change often during your college experience. Read all letters which you are sent and emails, too. Follow through on it immediately. Missing anything in your paperwork can cost you valuable money.
Don’t fret when extenuating circumstances prevent you from making a payment. Generally, your lender will work with you during difficult situations. Just know that the interest rates may rise.
If you were laid off or are hit with a financial emergency, don’t worry about your inability to make a payment on your student loan. Lenders will typically provide payment postponements. Just be mindful that doing so could make your interest rates rise.
Don’t forgo private loans for college. Student loans through the government are available, but there is a lot of competition. Private loans are easy to get and there are many options. Investigate around your community for private loans; even a small one can cover room and board for a term or two.
Never do anything irrational when it becomes difficult to pay back the loan. Unemployment and health emergencies can happen at any time. Remember that forbearance and deferment options are widely available on a lot of loans. But bear in mind that interest will still accrue, so consider making whatever payments you can to keep the balance in check.
Do not panic if an emergency makes paying your loans temporarily difficult. Unemployment or a health problem can happen to you from time to time. Luckily, you may have options such as forbearance and deferral that will help you out. However, the interest will build during the time you are not making payments.
If you wish to repay student loans in advance, deal with the ones with the highest interest rates first. If you pay off the wrong loans first, you could end up paying more than you need to.
When paying off student loans, do it using a two-step process. First, be sure to pay the monthly amount due on each loan you have taken out. Second, you will want to pay a little extra on the loan that has the higher interest rate, and not just the largest balance. That way, you will end up spending a lesser amount overall.
Begin Paying
If you want to pay down student loans faster than scheduled, start with the highest interest rate loans first. You definitely want to pay down the ones with the highest interest rate, because taking care of the lower ones could cause you to end up paying more money.
It is important to know how much time after graduation you have before your first loan payment is due. For example, you must begin paying on a Stafford loan six months after you graduate. Perkins loans are about 9 months. Other types of student loans can vary. Be sure you know exactly when you will be expected to begin paying, and don’t be late!
Select the payment arrangement that is best for you. Ten year plans are generally the default. If this won’t work for you, there may be other options available. You might be able to extend the payments, but the interest could increase. You might be eligible to pay a certain percentage of income when you make money. Some student loans offer loan forgiveness after a period of 25 years has elapsed.
Make sure that you specify a payment option that applies to your situation. Many student loans offer 10-year payment plans. If this is not ideal for you, look into other possibilities. For instance, it may be possible to stretch out your payments for a longer period of time, although you will end up paying more interest. You may also have the option of paying a certain percentage of your future earnings. Some balances are forgiven if 25 years have passed.
To help maximize the money you get from student loans, sign up for additional credit hours. If you sign up for more course credits each semester you can graduate a lot quicker, which in the end will save you a lot of money. This helps to lower your loan amounts.
Choose payment options that fit your financial circumstances. Many student loans will offer a 10 year repayment plan. If this isn’t working for you, there could be a variety of other options. It is sometimes possible to extend the payment period at a higher interest rate. Therefore, you should pay it once you make money. It may be that your loan will be forgiven after a certain period of time as well.
Bad credit will mean you need a cosigner on a private loan. Making payment on time is very important. If you don’t keep up with payments on time, your co-signer will be responsible, and that can be a big problem for you and them.
College involves many decisions, but the debt you accrue is one of the most important. Borrowing too much at too high a rate can be a serious issue. Keep this material in mind as you launch your adventures in higher education.
Avoid depending on student loans completely for school. You should also save up your money and go after scholarships and grants. The Internet is your friend here; you can find a lot of information on scholarships and grants that might pertain to your situation. Be sure to begin your search as soon as possible in order to be prepared.