At some point in your life, you may have to get a student loan. It may be that you are currently in this situation, or it might be something that comes down the road. Regardless of when, finding out all you can will help you in getting what you need. Use the following tips to ensure you handle student loans the right way.
Be sure you know all details of all loans. You must watch your balance, keep track of the lender, and monitor your repayment progress. These things matter when it comes to loan forgiveness and repayment. This information is needed for proper budgeting.
You don’t need to panic if a problem arises during repayment of your loans. Emergencies are something that will happen to everyone. Keep in mind that forbearance and deferment options do exist with most loans. Just be mindful that interest continues to accrue in many options, so at least consider making interest only payments to keep balances from rising.
Start Making Payments
When you graduate, know how much time you have before you have to start making payments on your loans. Six months is usually the length for Stafford loans. A Perkins loan gives you a nine month grace period. Other loans vary. Know exactly the date you have to start making payments, and never be late.
Prioritize your repayment of student loans by the interest rate of each one. Go after high interest rates before anything else. Using any extra cash available can help pay off student loans faster. There are no penalties for early payments.
Pay the largest of your debts first. If your principal is ower, you will save interest. It is a good idea to pay down the biggest loans first. When you pay off one loan, move on to the next. Pay off the minimums on small loans and a large amount on the big ones.
Anyone on a budget may struggle with a loan. There are loan rewards programs that can help with payments. Check out programs from Upromise such as SmarterBucks and LoanLink. The are akin to cash back incentives, and the money spent works like a reward you can use toward your loan balance.
Some people sign the paperwork for a student loan without clearly understanding everything involved. It is essential that you question anything you do not clearly understand. This is one way that lenders use to get more than they should.
Interest Rate
Stafford and Perkins are the best loan options. Many students decide to go with one or both of them. They are favorable due to the fact that your interest is paid by the government while you are actually in school. Perkins loans have an interest rate of 5%. Subsidized Stafford loans have an interest rate cap of 6.8%.
Parents and graduate students can make use of PLUS loans. Their interest rate doesn’t exceed 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. It might be the best option for you.
Keep in mind that the school may have reasons of its own for suggesting you use certain lenders. Schools sometimes lend their name to private loan companies for a mutual benefit. This can be very misleading. The school might be getting a kickback from the lender. Therefore, don’t blindly put your trust in anything; do your own research.
Do not think that you can just default on student loans to get out of paying them. There are several ways the government can get their money. For example, the government can take a cut from your Social Security payments or your tax return. In addition, they can also collect up to 15 percent of other income you have. Generally speaking, you will be far worse off.
You might need a student loan for yourself or a child in the future. You must be knowledgeable about student loans to find the ones that are best for you. This article provided you with the basics, and you should apply them as needed.
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