Some people have to go through the process of getting a student loan in order to attend the school they desire. Sadly, too many borrowers enter into such obligations without a solid understanding of what it all means for their futures. Here are some of the basics that you need to know.
Verify the length of your grace period before repayment of your loan is due. This generally means the period after you graduate where the payments will become due. Being aware of this information allows you to make your payments in a timely manner so that you do not incur costly penalties.
Know the specifics about your loan. You need to be able to track your balance, know who you owe, and what your repayment status is. These things matter when it comes to loan forgiveness and repayment. It is your responsibility to add this information into your budget plans.
Keep in close touch with your lender. Make sure your records are updated, such as your phone number and address. Read all letters which you are sent and emails, too. Take any and all actions needed as soon as possible. You can end up spending more money than necessary if you miss anything.
Don’t worry if you can’t make a payment on your student loan due to a job loss or another unfortunate circumstance. Generally speaking, you will be able to get help from your lender in cases of hardship. However, this may negatively affect your interest rate.
Don’t panic if you cannot make your payments on your student loans. Job losses and health emergencies are part of life. Realize that there are ways to postpone making payments to the loan, or other ways that can help lower the payments in the short term. Interest continues to compound, however, so a good strategy is to make interest only payments that will prevent your balance from getting bigger.
Know how long you have between graduation and the commencement of loan payments. If you have Stafford loans, you will usually have about 6 months. Others, like the Perkins Loan, allot you nine months. Other types of student loans can vary. Keep in mind exactly when you’re supposed to start paying, and try not to be late.
Make certain that the payment plan will work well for you. Many student loans offer 10 year payment plans. You may discover another option that is more suitable for your situation. For example, you may be able to take longer to pay; however, your interest will be higher. You may also have to pay back a percentage of the money you make when you get a job. On occasion, some lenders will forgive loans that have gone unpaid for decades.
To help with paying off your loans, start paying off the loans by order of the interest rate that comes with each. You should always focus on the higher interest rates first. Paying a little extra each month can save you thousands of dollars in the long run. There is no penalty for paying off your loans early.
Pay the largest of your debts first. It should always be a top priority to prevent the accrual of additional interest charges. Focus on paying the largest loans off first. Once a big loan is paid off, simply transfer those payments to the next largest ones. If you make at least the minimum payment on all loans and large payments on the biggest loan, your student loan balances will disappear.
It may be frightening to consider adding student loans to your bills if your money is already tight. There are loan reward programs that can help people out. Two such programs are SmarterBucks and LoanLink. These are like programs that offer cash back, but the rewards are used to pay your loans.
Perkins Loan
The Perkins Loan and the Stafford Loan are both well known in college circles. Many students decide to go with one or both of them. They are great because while you are in school, your interest is paid by the government. Perkins loan interest rates are at 5 percent. Subsidized Stafford loans have a fixed rate of no more than 6.8 percent.
One form of loan that may be helpful to grad students is the PLUS loan. The highest the interest rate will go is 8.5%. Although this rate is higher than that of the Perkins and Stafford loans, it is lower than the rates charged for private loans. Therefore, this type of loan is a great option for more established and mature students.
Student loans are becoming a very common part of the college experience. If you need to take out loans, it is important to understand the process and know what you are doing. Take the tips in this article and use them. You will find that the loan process is much more manageable that way.
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