A student loan is something that many people have to take out at one point in their life. Maybe you want one now, or perhaps you need one later on. Regardless of when, finding out all you can will help you in getting what you need. What follows is a compilation of tips to help you learn about student loans.
Remain in contact with your lender. When you make changes to your address or phone number, make sure you let them know. In addition, when you get mail from your lender, be sure to read everything. Do whatever you need to as soon as you can. It can be quite costly if you miss anything.
Don’t be scared if something happens that causes you to miss payments on your student loans. Typically, most lenders will allow you to postpone your payments if you can prove you are having hardships. Just know that when you do this, interest rates might go up.
If you have trouble repaying your loan, try and keep a clear head. Life problems such as unemployment and health complications are bound to happen. Remember that forbearance and deferment options are widely available on a lot of loans. Interest will build up, so try to pay at least the interest.
Use a two-step process to pay off your student loans. Start by making the minimum payments of each loan. If you have money left over, apply that to the loan that has the highest interest associated with it. This will keep your total expenditures to a minimum.
Interest Rates
When you’re trying to pay off a student loan, be sure you pay them in order of interest rates. Pay loans with higher interest rates off first. By concentrating on high interest loans first, you can get them paid off quickly. The is no penalty for early repayment.
Pay off larger loans as soon as possible. It should always be a top priority to prevent the accrual of additional interest charges. Pay the larger loans off to prevent this from happening. After the largest loan is paid, apply the amount of payments to the second largest one. When you make minimum payments on each loan and apply extra money to your biggest loan, you get rid of the debts from your student loans systematically.
Take the maximum number of credit hours you can in your schedule to maximize the use of your loans. Though full-time student status requires 9-12 hours only, if you are able to take 15 or more, you will be able to finish your program faster. This helps reduce the total of loans.
Some people apply for loans and sign the papers without understanding the terms. It is essential that you question anything you do not clearly understand. An unscrupulous lender will always look for ways to see if they can get more money out of you.
To expedite the process of a student loan, make sure the application is filled out accurately. Incorrect and incomplete information gums up the works and causes delays to your education.
Stafford Loans
The best loans that are federal would be the Perkins or the Stafford loans. Generally, the payback is affordable and reasonable. This is a great deal due to your education’s duration since the government pays the interest. Perkins loan interest rates are at 5 percent. On Stafford loans that are subsidized, the loan will be fixed and no larger than 6.8%.
Going into default on your loans is not a wise idea. There are many tools in the federal government’s arsenal for getting the funds back from you. For instance, you might see money withheld from Social Security payments or even your taxes. The government also has the right to claim 15 percent of all your income. Therefore, defaulting is not a good solution.
After all is said and done, you may need a student loan sometime in the near or the far future. The more you know about these loans, the easier it is to find the best one for your own needs. This article provided you with the basics, and you should apply them as needed.
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