A student loan can let you get the education you have always wanted, but borrowing can easily get out of hand. It is key that you understand everything about student loans before making that final commitment. Continue reading to understand what you should know before borrowing.
Always be aware of what all the requirements are for any student loan you take out. Make sure you know how much you owe and how to contact your lender. You also want to know what your repayment status is. These details all affect loan forgiveness and repayment options. This information is necessary to plan your budget accordingly.
Maintain contact with your lender. Always let them know anytime your personal information changes, because this happens quite a bit when you’re in college. In addition, when you get mail from your lender, be sure to read everything. Take any requested actions as soon as you can. You can end up spending more money than necessary if you miss anything.
Know how much time you have in your grace period from the time you leave school until you must begin paying back your loans. Stafford loans typically give you six months. Perkins loans offer a nine-month grace period. Other types of student loans can vary. Know exactly the date you have to start making payments, and never be late.
Pick a payment plan that suits your particular needs. Many student loans come with a ten year length of time for repayment. If this is not ideal for you, then there are other choices out there to explore. 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. It’s even the case that certain student loans are forgiven after a certain time period, typically 25 years.
When the time comes to repay student loans, pay them off based on their interest rate. Begin with the loan that has the highest rate. Whenever you have a little extra money, put it towards your student loans to pay them off as fast as possible. There are no penalties for early payments.
Making monthly payments is often difficult for those whose budget is tight. There are loan rewards programs that can help with payments. Upromise offers many great options. They will make small payments towards your loans when you use them.
To help maximize the money you get from student loans, sign up for additional credit hours. To be considered a full-time student, you usually have to carry at least nine or 12 credits, but you can usually take as many as 18 credit each semester, which means that it takes less time for you to graduate. This helps you shave off some of the cost of your loans.
The Perkins Loan and the Stafford Loan are both well known in college circles. They are cheap and safe. With these, the interest is covered by the federal government until you graduate. Interest rate on the Perkins loan is five percent. Subsidized Stafford Loans will have an interest rate that goes no higher than 6.8 percent.
PLUS loans are available if you are a graduate student or the parent of one. The interest rate is no greater than 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. This means that this is a suitable choice for students who are a bit older and better established.
Remember that your school may have its own motivations for recommending you borrow money from particular lenders. Schools sometimes let private lenders use the name of the school. That leads to confusion. The school can get a portion of this payment. Understand the terms of the loan before you sign the papers.
Do not think that defaulting will relieve you from your student loan debts. The Federal government will be able to recover the money through multiple options. The federal government can take your Social Security payments or take your tax refunds if money is owed. They can also tap into your disposable income. In many instances, you’ll wind up in a position that is worse than where you started.
As you’ve read, there is much to think about when dealing with student loans. Your decisions have everything to do with you paying your loans back post graduation. Be a smart borrower.