When you take out a bad loan, you may be haunted for a long time. It’s best to make yourself knowledgeable on the subject of student loans before signing any paperwork. Continue reading to understand what you should know before borrowing.
Make sure you stay in close contact with your lenders. Make sure they know your current address and phone number. Read all letters which you are sent and emails, too. If any requests are made or important stipulations are shared with you, act on them right away. Failure to miss anything can cost you a lot of money.
Focus on paying off student loans with high interest rates. Do not simply pay off the loan that has the smallest amount remaining.
Grace Period
Know how much time your grace period is between graduating and when you need to start paying back loans. For example, you must begin paying on a Stafford loan six months after you graduate. Perkins loans offer a nine month grace period. Grace periods for other loans vary. Know what you have to pay when, and pay on time!
Choose the right payment option for you. The majority of loan products specify a repayment period of ten years. If this isn’t working for you, there could be a variety of other options. As an example, it may be possible to extend your payment time, but typically that’ll include a higher interest rate. You could start paying it once you have a job. The balance of some student loans is forgiven after 25 years.
If you don’t have a lot of “extra” money, student loans can really make life difficult for you. That can be reduced with loan rewards programs. Look into something called SmarterBucks or LoanLink and see what you think. These are essentially programs that give you cash back and applies money to your loan balance.
Take as many hours each semester as you think you can handle so you don’t waste any money. 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.
Lots of folks enter into student loans without having the foggiest idea of what they are signing on for. Ask to get clarification on anything you don’t understand. Otherwise, you could have much more debt than you were counting on.
Perkins and Stafford are some of the best federal student loans. They tend to be affordable and entail the least risk. They are a great deal because the government pays the interest on them during the entirety of your education. Perkins loans have a rate of 5 percent interest. The Stafford loans are subsidized and offer a fixed rate that will not exceed 6.8%.
Bad credit will mean you need a cosigner on a private loan. Keep your payments up to date. If you don’t do this, your co-signer is liable for those debts.
There is a loan that is specifically for graduate students or their parents known as PLUS loans. Their interest rate does not exceed 8.5%. This is a better rate than that of a private loan, though higher that those of Perkins or Stafford loans. This is the best option for mature students.
Do not think that defaulting will relieve you from your student loan debts. The government has many ways to get the money. A couple of tactics they use to collect the money you owe is taking some tax return money, Social Security and even wage garnishment at your job. The government even has the right to take up to fifteen percent of what it deems your disposable income. You could end up worse off that you were before in some cases.
As you can see, there are a lot of things to consider when it comes to student loans. Your decisions will affect the rest of your life, long after you graduate. Smart borrowing is the way to go, and the tips in the above article should be remembered when you go to apply for a student loan.
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