Student loans are an essential tool to affording a good education. College is becoming very costly, so loans are even more important. The piece below provides great tips on successfully getting and managing student loans.
Do know that you are probably going to have a post-graduation grace period from your student loans before you are required to start making payments back. The grace period is the time you have between graduation and the start of repayment. When you know what it is, you will have time to make a payment plan that will help you pay on time without penalties.
Always figure out what the details of the loans you have out are. You must watch your loan balances, check your repayment statuses, and know your lenders. These facts will determine your loan repayment and forgiveness options. This information is needed for proper budgeting.
Stay in contact with all lenders. Keep them updated on your personal information. When your lender send you information, either through snail mail or e mail, read it that day. Perform all actions to do as soon as you can. If you miss any piece of information, you may end up spending more money.
Never do anything irrational when it becomes difficult to pay back the loan. Unemployment or a health problem can happen to you from time to time. Make sure you are aware of the specific terms that apply to such circumstances, such as deferments or forbearance, which are part of most loan programs. Just remember that interest keeps accruing in many forms, so try to at least make payments on the interest to keep the balances from increasing.
Pay your student loans using a 2-step process. First, ensure you make all minimum monthly payments. Second, make extra payments on the loan whose interest rate is highest, not the loan that has the largest balance. This will minimize the amount of money you spend over time.
To pay down your student loans effectively, focus on the one that has the highest interest rate. If you solely base your repayment by which ones have a lower or higher balance, then you might actually end up paying back more in the end.
Pick a payment plan that works best for you. Many student loans offer 10 year payment plans. If this is not ideal for you, then there are other choices out there to explore. Perhaps you can stretch it out over 15 years instead. Keep in mind, though, that you will pay more interest as a result. Another option would be a fixed percentage of your wages when you get a job. It may be that your loan will be forgiven after a certain period of time as well.
Monthly loan payments after college can be very intimidating. There are frequently reward programs that may benefit you. Check out programs from Upromise such as SmarterBucks and LoanLink. The are akin to cash back incentives, and the money spent works like a reward you can use toward your loan balance.
Take as many hours each semester as you think you can handle so you don’t waste any money. Full-time is considered 9 to 12 hours per semester, take a few more to finish school sooner. This will help reduce how much you have to borrow.
Interest Rate
The two best loans on a federal level are called the Perkins loan and the Stafford loan. They are cheap and safe. They are a great deal because the government pays the interest on them during the entirety of your education. The interest rate on a Perkins loan is 5 percent. The interest rate on Stafford loans that are subsidized are generally no higher than 6.8 percent.
A co-signer may be necessary if you get a private loan. Make sure you keep every payment. Otherwise, the co-signer will also be on the hook for your loans.
Do not think that defaulting will relieve you from your student loan debts. There are several ways the government can get their money. They can take your income taxes or Social Security. In addition, they can also collect up to 15 percent of other income you have. You can easily find yourself in a very bad position that will take many years to get out of and cause many headaches.
Due to the very high cost to attend school, most people will likely need their education financed through loans. Getting a loan for a student isn’t as hard when the right advice is followed. Luckily, you have the information in this article. Get the information you need, and feel good about your student loans.
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