Student loans are critical when it comes to higher education these days. With the cost of attending college going up each year, there are few people who can pay the entire cost out of pocket. Luckily, the information below will help you make wise decisions when it comes time to take out a student loan to pay for your education.
Do know that you are probably going to have a post-graduation grace period from your student loans before you are required to start making payments back. Usually, there is a time period after you leave school before you must begin paying the loans. This can also give you a big head start on budgeting for your student loan.
Always know all of the key details of any loan you have. You need to watch what your balance is, who the lender you’re using is, and what the repayment status currently is with loans. These details are imperative to understand while paying back your loan. This is must-have information if you are to budget wisely.
Make sure you are in regular contact with the lender. Update your address, phone number or email address if they change which sometimes happens quite frequently during your college days. You must also make sure you open everything right away and read all lender correspondence via online or mail. Do whatever you must as quickly as you can. You can end up spending more money than necessary if you miss anything.
Private Student Loan
Private financing could be a wise idea. There are lots of student loans available, and there is also a lot of demand and a lot of competition. A private student loan has less competition due to many people being unaware that they exist. A private student loan from a community source may be just what you need to buy textbooks or manage some other specific expense.
You are offered a grace period after you graduate before you must start paying on your student loans. Stafford loans usually have one half year before the payments have to be made. A Perkins loan gives you a nine month grace period. Other loans vary. Make sure you know how long those grace periods are, and never pay late.
Make sure that you specify a payment option that applies to your situation. In the majority of cases, student loans offer a 10 year repayment term. If this won’t work for you, there may be other options available. For instance, it may be possible to extend the loan’s term; however, that will result in a higher interest rate. You can put some money towards that debt every month. There are some student loans that will be forgiven if you have not got them paid in full within 25 years.
Pay off your loans in order of interest rates. Pay off the highest interest student loans first. Do what you can to put extra money toward the loan so that you can get it paid off more quickly. There is no penalty for repaying sooner than expected.
Squeeze in as many possible credit hours as you can to maximize your student loans. 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. This will help in reducing your loan significantly.
Make sure to understand everything about student loans before signing anything. Ask questions so you can clear up any concerns you have. This is an easy way for a lender to get more money than they are supposed to.
Two of the most popular school loans are the Perkins loan and the often mentioned Stafford loan. These have some of the lowest interest rates. These are good loans because the government pays the interest while you are still in school. The Perkins loan has a small five percent rate. On the subsidized Stafford loan, it’s fixed at no higher than 6.8%.
For private loans, you may require a co-signature if you have no credit or bad credit. Make your payments on time. If you don’t keep up with payments on time, your co-signer will be responsible, and that can be a big problem for you and them.
PLUS loans are available if you are a graduate student or the parent of one. Normally you will find the interest rate to be no higher than 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. It’s a good option for students pursuing higher education.
Your college may have motives of its own for recommending certain lenders. Schools sometimes lend their name to private loan companies for a mutual benefit. This is generally misleading. Sometimes a school will have worked out a financial deal with a lender if you choose to use them. Know what the loan terms are before signing on the dotted line.
Student loans are simply part of the higher education process. But that does not mean you shouldn’t seek the very best terms for yourself that you can find. It’s important to learn all that’s necessary about these loans to keep from getting burned over time.