Student loans play a critical role in the acquisition of higher education, but when unwisely obtained, they can produce real hardships. So it’s a good idea to get smart and learn about student loans before signing anything. Continue on and get educated so you understand it all before taking on this debt.
If you lose your job, face financial issues or some other bump in the road comes up, don’t worry about missing a payment. When hardship hits, many lenders will take this into consideration and give you some leeway. Just remember that doing this may raise interest rates.
Don’t panic when you struggle to pay your loans. Health emergencies and unemployment are likely to happen sooner or later. Most loans will give you options such as forbearance and deferments. Still, remember that your interest will have to be paid back, so try and pay what you can, when you can.
Highest Interest
If you plan to prepay your loans, try to pay those with the highest interest rates first. You definitely want to pay down the ones with the highest interest rate, because taking care of the lower ones could cause you to end up paying more money.
When you’re trying to pay off a student loan, be sure you pay them in order of interest rates. Go after high interest rates before anything else. Any extra cash you have lying around will help you pay these quicker. There are no penalties for early payments.
It is very important that you correctly fill out all student loan documents to ensure the timely process of them. Incorrect or inaccurate information will only delay the process, and that may result in your schooling pushed back to the following semester.
Perkins Loans
Stafford and Perkins loans are two of the best that you can get. They tend to be affordable and entail the least risk. They are great because while you are in school, your interest is paid by the government. Perkins loans have a rate of 5 percent interest. On Stafford loans that are subsidized, the loan will be fixed and no larger than 6.8%.
PLUS loans are a type of loan that is available only to parents and graduate students. They bear an interest rate of no more than 8.5%. This is a better rate than that of a private loan, though higher that those of Perkins or Stafford loans. Therefore, this kind of loan can be useful for students who are older.
Keep in mind that your institution of learning may have ulterior motives for steering you toward specific lenders. Some schools allow private lenders to use the school name. That leads to confusion. The school might be getting a kickback from the lender. Learn all you can about student loans before you take them.
Do not consider the idea that a default on your student loan will give you freedom from your debt. The federal government can recover that money in a few different ways. For instance, it has the power to seize tax refunds as well as Social Security payments. The government may also take 15 percent of your income. You could end up worse off in some circumstances.
When you’re trying to fill out a financial aid application, be sure that you’re not making any errors on it. Bad calculations will affect the amount you can take out on a loan. If you are unsure of anything in your application, talk with a financial aid counselor at your school.
There are many things you have to think about if you are getting a loan. The choices you make now can have big implications on your life, even well after you graduate from school. Use these tips to make the best decision for student loans.
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