A high school student can normally expect to begin receiving offers for student loans. It might seem like a good thing to receive all those offers. You must consider many things before signing up for debt later on.
Understand the grace period of your loan. Typically this is the case between when you graduate and a loan payment start date. Being aware of this will help you get a jump start on payments, which will help you avoid penalties.
Always know all the information pertinent to your loans. Know your loan balance, your lender and the repayment plan on each loan. It will benefit you in getting your loans taken care of properly. This is must-have information if you are to budget wisely.
Communicate often with the lender. Always update them anytime your address, email or phone number changes, which can happen a lot during college. Also, make sure that you immediately open and read every piece of correspondence from your lender, both paper and electronic. You must act right away if information is required. Missing anything could make you owe a lot more money.
Don’t worry if you can’t make a payment on your student loan due to a job loss or another unfortunate circumstance. When hardship hits, many lenders will take this into consideration and give you some leeway. Just be mindful that doing so could make your interest rates rise.
Don’t forgo private loans for college. Though federal loans are common, competition in the market does exist. Not as many students opt for private student loans and money stays unclaimed because not too many people are aware of them. Explore the options in your community.
Grace Period
Know how much time your grace period is between graduating and when you need to start paying back loans. Stafford loans provide a six month grace period. For Perkins loans, the grace period is nine months. Other types of student loans can vary. Know what you have to pay when, and pay on time!
Go with the payment plan that best fits what you need. You will most likely be given 10 years to pay back a student loan. If this does not fit your needs, you may be able to find other options. For instance, you might be able to get a longer repayment term, but you will pay more in interest. It may also be possible for you to dedicate a portion of your salary to loan repayment once you have a regular paycheck coming in. Sometimes you may get loan forgiveness after a period of time, often 25 years.
Pick a payment option that works bets for you. The majority of loan products specify a repayment period of ten years. It is possible to make other payment arrangements. For instance, you can take a longer period to pay, but that comes with higher interest. You can also do income-based payments after you start earning money. Some loans’ balances get forgiven after 25 years.
Reduce the total principal by getting things paid off as fast as you can. The less principal that is owed, the less you’ll have to pay in interest. Focus on the big loans up front. When a large loan is repaid, just start paying on the next ones you owe. 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.
Get many credit hours each semester. As much as 12 hours during any given semester is considered full time, but if you can push beyond that and take more, you’ll have a chance to graduate even more quickly. In the grand course of time, you will end up taking out fewer loans.
Too often, people will accept student loans without contemplating the legal implications. Ask questions so that you are completely aware. There are unscrupulous lenders who will take advantage of the unwary.
Interest Rate
The Stafford and Perkins loans are good federal loans. These have some of the lowest interest rates. These are great options because the government handles your interest while you are in school. The Perkins loan has an interest rate of 5%. The subsidized Stafford loan has an interest rate that does not exceed 6.8%.
When completing the application for financial aid, be sure to avoid making any errors. This is important because it may affect the amount of the student loan you are offered. If you think that you’re making any kind of a mistake, get into touch with your school’s financial aid representative.
There are lots of decisions to make in college, and one of the biggest is about debt load. When you borrow more than you need, or accept too high an interest rate, you may end up in trouble. So, keep in mind what you’ve just read as you embark on the journey of higher education.
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