Most students will have to take on some kind of debt to get through school. Understand how these loans work before you enter into one to ensure that you are prepared for it. This information may help you to begin.
Be sure you understand the fine print of your student loans. Stay on top of what your balance is and know which lender you borrowed from, plus what your repayment status is. These are three very important factors. This is must-have information if you are to budget wisely.
Stay in contact with your lender. Anytime there are changes to your personal information such as where you live, phone number, or email, it is important they are updated right away. In addition, be sure to open and read all correspondence that you receive from your lender right away, whether it arrives electronically or via snail mail. Take whatever actions are necessary as soon as you can. Missing anything in your paperwork can cost you valuable money.
Don’t worry if you can’t pay a student loan off because you don’t have a job or something bad has happened to you. The lenders can postpone, and even modify, your payment arrangements if you prove hardship circumstances. Just know that the interest rates may rise.
Pay your loan off in two steps. First, ensure you make all minimum monthly payments. Pay extra on the loan with the highest interest rate. In this way, the amount you pay as time passes will be kept at a minimum.
Know how long you have between graduation and the commencement of loan payments. For example, you must begin paying on a Stafford loan six months after you graduate. Perkins loans give you nine months. Other types of loans may vary. Know when you will have to pay them back and pay them on time.
Be sure you select the right payment plan option for you. The majority of student loans have ten year periods for loan repayment. You may be able to work a different plan, depending on your circumstances. You might be able to extend the plan with a greater interest rate. You might be eligible to pay a certain percentage of income when you make money. Sometimes you may get loan forgiveness after a period of time, often 25 years.
Choose a payment option based on your circumstances. Most student loans have a ten year plan for repayment. If this does not appear to be feasible, you can search for alternative options. You could extend the payment duration, but you’ll end up paying more. You can also possibly arrange a deal where you pay a certain percentage of your overall post-graduation income. The balance of some student loans is forgiven after 25 years.
The idea of paying off a student loan every month can seem daunting for a recent grad on a tight budget. Rewards programs can help. For instance, look into the Upromise programs called SmarterBucks and LoanLink. They will make small payments towards your loans when you use them.
The simplest loans to obtain are the Stafford and Perkins. This is because they come with an affordable cost and are considered to be two of the safest loans. With these, the interest is covered by the federal government until you graduate. Perkins loans have an interest rate of 5%. The Stafford loans are subsidized and offer a fixed rate that will not exceed 6.8%.
If you don’t have good credit, and you are applying for a student loan from a private lender, you will need a co-signer. It’s imperative that you make your payments on time. Otherwise, the other party must do so in order to maintain their good credit.
Get the idea out of your head that you will be forgiven for a student loan that you have defaulted on. The government will often still get its money back anyway. A couple of tactics they use to collect the money you owe is taking some tax return money, Social Security and even wage garnishment at your job. They can also claim up to fifteen percent of your income that is disposable. In many instances, you’ll wind up in a position that is worse than where you started.
If you are lucky enough to attend graduate school, then you already are aware of how crushing student loan debt can be. Until college starts to get cheaper, this is going to be something most people have to deal with. Use the advice you have read here to keep your student loans to a minimum and pay them off promptly.