Taking out student loans may be imperative to your financial plan for college. Many people don’t want to do this. Fortunately, the paragraphs that follow are full of ideas and advice that you can use.
Keep in mind that there’s a grace period to follow before it’s time to pay a loan back. This usually means the period of time after graduation where the payments are now due. Knowing when this is over will allow you to know when to pay your payments on time so you don’t have a bunch of penalties to take care of.
Make it a point to be aware of all the important facets of your student loans. Keep a running total on the balance, know the repayment terms and be aware of your lender’s current information as well. These important items are crucial when it comes time to pay back the loan. You have to have this information if you want to create a good budget.
Student Loans
Pay off all your student loans using two steps. Begin by figuring out how much money you can pay off on these student loans. Second, if you have any extra money, use it to make extra payments on the loan that bears the higher interest rate rather than the one that bears the highest balance. This will cut down on your liability over the long term.
How long is your grace period between graduation and having to start paying back your loan? Stafford loans usually have one half year before the payments have to be made. Perkins loans enter repayment in nine months. Grace periods for other loans vary. Know what you have to pay when, and pay on time!
When it comes time to pay back your student loans, pay them off from higher interest rate to lowest. You should pay off the loan that has the highest interest first. Anytime you have extra cash, apply it toward your student loans. Prepayment of this type will never be penalized.
Credit Hours
To make your student loan money stretch even farther, consider taking more credit hours. You may be able to scrape by with 12 hours, but try to at least carry 15 per semester. If possible, go for 18. When you handle your credit hours this way, you’ll be able to lessen the amount of student loans needed.
For private loans, you may require a co-signature if you have no credit or bad credit. Once you have the loan, it’s vital that you make all your payments on time. If you miss a payment, then your co-signer will not be happy because they are just as responsible for these payments as you are.
A PLUS loan is specifically oriented to address the needs of graduate students and/or parents. They cap their interest rate at 8.5 percent. These rates are higher, but they are better than private loan rates. Therefore, this kind of loan can be useful for students who are older.
Remember that your school may have its own motivations for recommending you borrow money from particular lenders. Some colleges permit private lenders to utilize the name of the school. This is really quite misleading. A school might get a kickback for you signing up for that lender. Know what the loan terms are before signing on the dotted line.
Don’t rush into taking a private student loan. Finding exact terms is difficult. Many times, you will not know until you’ve already signed for them. And at that moment, it may be too late to do anything about it. Learn as much as possible. If you receive a good offer, go to other lenders and see if they’ll beat that offer.
Student loans are often necessary and important to the college process. This article has now provided you with all the knowledge you need to choose wisely. Use what you’ve just learned to make wise student loan decisions.
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