Student loans are helpful, but if you don’t know what to look for, they can turn into a nightmare. So, the time to educate yourself about this topic is prior to signing on the dotted line. The advice that follows is a good starting point.
Always be aware of what all the requirements are for any student loan you take out. 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 important items are crucial when it comes time to pay back the loan. It is your responsibility to add this information into your budget plans.
Student Loans
Consider private funding for your college education. Student loans from the government are plentiful, but they come with a lot of competition. Private student loans reside in a different category. Often, some of the money is never claimed because students don’t know about it. Check your local community for such loans, which can at least cover books for a semester.
Never panic when you hit a bump in the road when repaying loans. You will most likely run into an unexpected problem such as unemployment or hospital bills. Know that there are options available such as a forbearance or deferment. 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.
If you wish to repay student loans in advance, deal with the ones with the highest interest rates 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. Stafford loans usually have one half year before the payments have to be made. For Perkins loans, you’ll have a nine month grace period. Other types can vary. Know when you are expected to pay them back, and make your payments on time!
Pay off your loans in order of interest rates. Pay off the loan with the largest interest rate first. Using any extra cash available can help pay off student loans faster. Student loans are not penalized for early payoff.
Lower your principal amounts by repaying high interest loans first. The lower the principal amount, the lower the interest you will owe. It is a good idea to pay down the biggest loans first. When you pay off a big loan, apply the payment to the next biggest one. By making sure you make a minimum payment on your loans, you’ll be able to slowly get rid of the debt you owe to the student loan company.
The concept of making payments on student loans each month can be frightening when money is tight. Rewards programs can help. Two such programs are SmarterBucks and LoanLink. These give you rewards that you can apply toward your loan, so it’s like a cash back program.
One form of loan that may be helpful to grad students is the PLUS loan. The interest rate won’t be any larger than 8.5%. These rates are higher, but they are better than private loan rates. This is often a good alternative for students further along in their education.
Get rid of the notion that by defaulting on a loan it will get you out of debt. There are various ways that your finances can suffer because of unpaid student loans. The federal government can garnish your taxes and disability payments. Additionally, they can garnish your wages. Therefore, defaulting is not a good solution.
There are many things you have to think about if you are getting a loan. The decisions you make now will affect you long after graduation. Borrowing properly is best, so use the tips above when dealing with student loans.
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