Knowing that student loans are out there today helps a student feel better when figuring out how they will pay for school. College can be very expensive. Luckily, the information below will help you make wise decisions when it comes time to take out a student loan to pay for your education.
Stay in touch with your lending institution. Make sure they always know your address, phone number and email, all of which can change often during your college experience. Also, make sure that you immediately open and read every piece of correspondence from your lender, both paper and electronic. Take any necessary actions as soon as you can. Failure to miss anything can cost you a lot of money.
If you can’t make a payment on your loans because of unforeseen circumstances, don’t worry. Many lenders will let you postpone payments if you have financial issues. Just be aware that doing so may cause interest rates to rise.
If you wish to repay student loans in advance, deal with the ones with the highest interest rates first. If your payment is based on what loans are the highest or lowest, there’s a chance you’ll be owing more at the end.
Grace Period
How long is your grace period between graduation and having to start paying back your loan? For Stafford loans, the period is six months. Perkins loans offer a nine-month grace period. Other loans vary. Know when you will have to pay them back and pay them on time.
Choose a payment plan that you will be able to pay off. Most student loans have a ten year plan for repayment. There are often other choices as well. You might be able to extend the plan with a greater interest rate. You can pay a percentage once the money flows in. Some balances are forgiven if 25 years have passed.
Choose payment options that fit your financial circumstances. Most student loans have a ten year plan for repayment. You can consult other resources if this does not work for you. You may need to extend the time you have to repay the loan. This often comes with an increase in interest. You could start paying it once you have a job. Some student loan balances are forgiven after twenty five years have passed.
When repaying student loan obligations, prioritize them by interest rate. Pay off the highest interest student loans first. Using your extra cash can help you get these student loans paid off quicker. Student loans are not penalized for early payoff.
To help maximize the money you get from student loans, sign up for additional credit hours. Generally, being a full-time student is seen as 9 to 12 hours per semester, but if you can squeeze in between 15 or 18, then you should be able to graduate sooner. This will help in reducing your loan significantly.
Stafford 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. These are good loans because the government pays the interest while you are still in school. Perkins loans have an interest rate of 5%. On a subsidized Stafford loan, it will be a fixed rate of no larger than 6.8 percent.
Applying for a private loan with substandard credit is often going to require a co-signer. You should be sure to stay on top of your payments and never miss one. If you can’t pay, your co-signer will also be liable.
PLUS loans are a type of loan that is available only to parents and graduate students. They have a maximum interest rate of 8.5 percent. While it may be more than other loans, it is cheaper than you will get through a private lender. Because of this, you should get this option only if you’re an established and mature student.
Get rid of the notion that by defaulting on a loan it will get you out of debt. The government will come after you. For example, they can claim a little of a tax return or even a Social Security payment. It could also get part of your income as well. This will leave you worse off.
Student loans are now a part of college as much as football or keg parties. But, this means missing important deadlines sometimes and forgetting little details. When you review the information available now, you can prevent a lot of sorrow and stress in the future.
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