You might be offered loans before you’ve even celebrated your high school graduation. This may be something that can benefit you significantly. But, you should think over a few things before you get into this kind of a debt.
Know that there’s likely a grace period built into having to pay back any 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.
Know the specifics about your loan. Stay on top of what your balance is and know which lender you borrowed from, plus what your repayment status is. These are details that play an important role in your ultimate success. Budget wisely with all this data.
Communicate often with the lender. Notify them if there are any changes to your address, phone number, or email as often happens during and after college. Do not neglect any piece of correspondence your lender sends to you, whether it comes through the mail or electronically. Take action right away. If you forget about a piece of mail or put something aside, you could be out a bunch of money.
Do not panic if a job loss or other emergency makes paying your student loan difficult. Most lenders can work with you if you lose your job. Make sure you realize that going this route may result in increased interest.
If you can pay off any loans before they are due, pay off the ones with the highest interest first. If you get your payments made on the loans that have the lowest or the highest, it can cost you extra in the end.
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. A Perkins loan gives you a nine month grace period. Other loans vary. Know when you are to begin paying on your loan.
To help with paying off your loans, start paying off the loans by order of the interest rate that comes with each. Pay loans with higher interest rates off first. You will get all of your loans paid off faster when putting extra money into them. The is no penalty for early repayment.
The idea of paying off a student loan every month can seem daunting for a recent grad on a tight budget. There are loan reward programs that can help people out. Look at websites such as SmarterBucks and LoanLink to learn about this kind of program offered by Upromise. These give you rewards that you can apply toward your loan, so it’s like a cash back program.
Many people get student loans without reading the fine print. It is important that you ask questions to clarify anything that is not really clear to you. This is one way a lender may collect more payments than they should.
Be sure to fill your student loan application correctly. 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.
The Stafford and Perkins loans are good federal loans. This is because they come with an affordable cost and are considered to be two of the safest loans. This is a great deal that you may want to consider. The Perkins loan has a small five percent rate. Subsidized Stafford loans offer interest rates no higher than 6.8 percent.
Keep in mind that the school you attend could have a hidden agenda when it comes to them recommending you to a lender. They may have a deal with a private lender and offer them use of the school’s name. This may be deceiving. The school might get a payment or reward if a student signs with certain lenders. Know what is going on before you sign.
Banish the notion that defaulting on your student loans means freedom from debt. There are several ways the government can get their money. Claiming part of your income tax return or your Social Security payments are only two examples. In addition, they can garnish your wages and take a significant portion of your take home pay. You could end up worse off that you were before in some cases.
Be careful with private loans. It isn’t easy to know what the terms might be. It may be that you are unaware of them until it is too late. When this occurs, it might be too late to get out of trouble. Get as much information as you can. If you receive an offer that’s great, see if other lenders can beat or match it.
Starting college means making important decisions, but none are quite as important as thinking about the debt you are about to take on. Borrowing too much or borrowing ones with high interest rates can create a major problem for you. Keep this material in mind as you launch your adventures in higher education.
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