Student Loans: What Every Student Should Know

Does the high cost of education scare you? You may even envy others who are in school, and wonder how they’re able to pay for it. They often are able to do this thanks to the help of student loans which can help pay for a good education. Learn how you can get a student loan just like them.

If you have any student loans, it’s important to pay attention to what the pay back grace period is. The grace period is the period between when you graduate and when you have to start paying back your loans. When you stay on top of this, this will help you to maintain better financial control so that you don’t incur any extra fees or bad credit marks.

Don’t panic if you aren’t able to make a loan payment. You will most likely run into an unexpected problem such as unemployment or hospital bills. Virtually all loan products offer some form of a forbearance or deferment option that can frequently help. Still, remember that your interest will have to be paid back, so try and pay what you can, when you can.

When paying off student loans, do it using a two-step process. First, always make minimum payments each month. The second step is applying any extra money you have to your highest-interest-rate loan and not the one with the biggest balance. This will cut back on the amount of total interest you wind up paying.

If you can pay off any loans before they are due, pay off the ones with the highest interest first. If you think you will be better off paying the one with the highest monthly payments first, you may be wrong. Best to look at the interest rates.

Know how long you have between graduation and the commencement of loan payments. Stafford loans offer loam recipients six months. A Perkins loan gives you a nine month grace period. Other types of loans may vary. Know exactly the date you have to start making payments, and never be late.

Lower your principal amounts by repaying high interest loans first. The less principal you owe overall, the less interest you will end up paying. Pay off larger loans first. After paying off the biggest loan, use those payments to pay off the next highest one. By making sure you make a minimum payment on your loans, you’ll be able to slowly get rid of the debt you owe to the student loan company.

Take more credit hours to make the most of your loans. While full-time status often is defined as 9 or 12 hours a semester, if you can get to 15 or even 18, you can graduate much sooner. This will decrease the loan amount.

Some people apply for loans and sign the papers without understanding the terms. Always ask any questions that come up or if you need anything clarified. This is a simple way for the lender to receive a bit more money than they are entitled to.

Perkins Loan

Two of the most popular school loans are the Perkins loan and the often mentioned Stafford loan. They are both reliable, safe and affordable. With these, the interest is covered by the federal government until you graduate. The Perkins loan interest rate is 5%. Subsidized Stafford loans offer interest rates no higher than 6.8 percent.

For private loans, you may require a co-signature if you have no credit or bad credit. You must pay them back! Otherwise, the other party must do so in order to maintain their good credit.

There is a loan that is specifically for graduate students or their parents known as PLUS loans. The highest the interest rate will go is 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. This makes it a good option for established and mature students.

Keep in mind that your institution of learning may have ulterior motives for steering you toward specific lenders. For example, there are schools that allow the use of their name by select private lenders. This is really quite misleading. The school may get some kind of a payment if you go to a lender they are sponsored by. It is important that you understand the entire loan contract before agreeing to it.

Now that you have read this article, it will be easier to get a student loan. Remember these tips when you fill out your financial aid form. Never allow the expense of college stop you from achieving your educational goals.

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