Student loans can give you an outlet for paying large college tuition costs. However, you shouldn’t get into getting loans until you know exactly what getting one entails. The information below can help you sort things out and make educated decisions about your financial and academic future.
Verify the length of your grace period before repayment of your loan is due. This usually refers to the amount of time you are allowed after you graduate to pay back the loan. When you have this information in mind, you can avoid late payments and penalty fees.
Learn about your loan’s grace period. This usually means the period of time after graduation where the payments are now 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.
Be aware of the terms of any loans you take out. Keep a running total on the balance, know the repayment terms and be aware of your lender’s current information as well. These details are going to have a lot to do with what your loan repayment is like and if you can get forgiveness options. This information is needed for proper budgeting.
Do not worry if you are unable to make a student loan payment because you lost your job or some other unfortunate circumstance has occurred. Usually, many lenders let you postpone payments if you are able to prove hardship. Just be aware that doing so may cause interest rates to rise.
Private financing is always an option. Because public loans are so widely available, there’s a lot of competition. Private loans are available, though perhaps not in the volume of federal ones. Look around for these kinds of loans, and you may be able to cover part of your schooling.
Private Student Loans
Don’t eschew private student loans for financing a college education. Though federal loans are common, competition in the market does exist. Many people do not know about private student loans, so it may be easier to get this type of financing. Speak with people in your local area to find these types of loans, which at the very least can cover some of your expenses.
Be mindful of the exact length of your grace period between graduation and having to start loan repayments. For Stafford loans, it should give you about six months. For Perkins loans, you’ll have a nine month grace period. Other types of student loans can vary. Be sure you know exactly when you will be expected to begin paying, and don’t be late!
If you plan to prepay your loans, try to pay those with the highest interest rates first. If you base your payment on which loans are the lowest or highest, there is a chance that you will end up owing more money in the end.
Be aware of the amount of time alloted as a grace period between the time you complete your education and the time you must begin to pay back your loans. Many loans, like the Stafford Loan, give you half a year. Perkins loans offer a nine month grace period. Other loans offer differing periods of time. Make certain you are aware of when your grace periods are over so that you are never late.
Many people apply for student loans and sign paperwork without really understanding what they are getting into. Make certain that you understand all of the facts before signing the dotted line. This is one way a lender may collect more payments than they should.
When it comes time to pay back your student loans, pay them off from higher interest rate to lowest. Pay off the highest interest rate loan first. By concentrating on high interest loans first, you can get them paid off quickly. 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. A loan rewards program may help with this circumstance. Consider Upromise and other similar organizations. These work like cash back programs, and the money you spend earns rewards that can be applied toward your loan.
Keep in mind that the school you attend could have a hidden agenda when it comes to them recommending you to a lender. For example, there are schools that allow the use of their name by select private lenders. This is oftentimes quite misleading to students and parents. The school might get an incentive if you use a certain lender. Understand every aspect of your loan right off the bat.
Stafford and Perkins loans are two of the best that you can get. These are very affordable and are safe to get. These are great options because the government handles your interest while you are in school. The Perkins loan has an interest rate of 5%. On a subsidized Stafford loan, it will be a fixed rate of no larger than 6.8 percent.
PLUS loans are known as student loans for parents and also graduate students. They cap their interest rate at 8.5 percent. This is a bit higher than Perkins and Stafford loan, but less than privatized loans. This makes it a great choice for more established students.
Be leery of applying for private loans. It isn’t easy to know what the terms might be. Oftentimes, you aren’t aware of the terms until after you have signed the papers. After that happens, it might prove quite difficult to free yourself from it. Learn all that you can prior to signing. Compare an offer with those given by other lenders to find out who offers the best rates.
Understand that school affiliations with lenders can be quite misleading when you are deciding which lender to choose. Schools sometimes let private lenders use the name of the school. This can be very misleading. The school may receive some sort of payment if you agree to go with a certain lender. Make sure to understand all the nuances of a particular loan prior to accepting it.
Get rid of thinking that defaulting on a loan means freedom. Unfortunately if you do this, the federal government will use all means necessary to recover this debt. For instance, you might see money withheld from Social Security payments or even your taxes. Additionally, they can garnish your wages. Therefore, defaulting is not a good solution.
Always double and triple check your financial aid form. If you do not fill it out correctly, you may not get as much money from the school. If you have doubts about any of the information, consult a financial aid rep.
It is certainly the case that far fewer students would go to college if student loans were unavailable. If you don’t understand what to look for, it can turn out bad. Keep this information close by so you can use it it help during the process of securing a student loan. (31)