Many people couldn’t go to school without loans. That said, these loans shouldn’t be dealt with until you know the perks and pitfalls of them. The following information with help you make heads or tails out of receiving financial aid for college.
Know what kind of grace periods your loans offer. This usually refers to the amount of time you are allowed after you graduate before repayments is required. Staying aware of when this period ends is the right way to make sure you never have late payments.
Stay in contact with your lender. Always let them know when you change your phone number, mailing address or email address, and these things can happen often when you are in college. 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. Follow through on it immediately. If you forget about a piece of mail or put something aside, you could be out a bunch of money.
If you were laid off or are hit with a financial emergency, don’t worry about your inability to make a payment on your student loan. Generally, your lender will work with you during difficult situations. You should know that it can boost your interest rates, though.
Private financing is something that you may want to consider. While you can easily find public ones, they have a lot of competition since they’re in demand. Student loans from private sources are not as popular. They are available in smaller increments and are often unclaimed because people don’t know about them. Look around for these kinds of loans, and you may be able to cover part of your schooling.
Don’t let setbacks throw you into a tizzy. Job losses and health emergencies are part of life. Most loans will give you options such as forbearance and deferments. Just be mindful that interest continues to accrue in many options, so at least consider making interest only payments to keep balances from rising.
It is important to know how much time after graduation you have before your first loan payment is due. Six months is usually the length for Stafford loans. Perkins loans have a nine-month grace period. The time periods for other student loans vary as well. Know when you are to begin paying on your loan.
Select a payment option that works best for your situation. Many student loans offer 10 year payment plans. If this is not ideal for you, then there are other choices out there to explore. For example, you might take a long time to pay but then you’ll have to pay a lot more in interest. You could also make payments based on your income. Some loans are forgiven after a 25-year period.
When the time comes to repay student loans, pay them off based on their interest rate. Pay off the one with the highest interest rate first. By concentrating on high interest loans first, you can get them paid off quickly. You don’t risk penalty by paying the loans back faster.
Pay off the loan with higher interest rates first so you can shrink the amount of principal you owe faster. You will reduce the amount of interest that you owe. Focus on paying the largest loans off first. When you pay off a big loan, apply the payment to the next biggest one. Make minimal payments on all your loans and apply extra money to the loan with the greatest interest in order to pay off all your loans efficiently.
The prospect of having to pay a student loan every month can be hard for people that are on hard budget already. You can make things a bit easier with help from loan rewards programs. For instance, look into SmarterBucks and LoanLink, products of Upromise. These are similar to programs that give cash back. When you spend, you get rewards that you can use on loans.
The Perkins Loan and the Stafford Loan are both well known in college circles. They tend to be affordable and entail the least risk. One of the reasons they are so popular is that the government takes care of the interest while students are in school. The Perkins loan has an interest rate of 5%. The Stafford loan only has a rate of 6.8 percent.
If you get a student loan that’s privately funded and you don’t have good credit, you have to get a co-signer most of the time. You should be sure to stay on top of your payments and never miss one. If you fail to do so, the co-signer will be responsible for the payments.
A PLUS loan is specifically oriented to address the needs of graduate students and/or parents. Normally you will find the interest rate to be no higher than 8.5%. This is a bit higher than Perkins and Stafford loan, but less than privatized loans. That is why it’s a good choice for more established and prepared students.
The fact is that most students couldn’t afford a higher education without any student loans. But, when you are not educated on repayment and securing a loan, disaster can occur. This material can put you in the best possible position.