Student loans play a critical role in the acquisition of higher education, but when unwisely obtained, they can produce real hardships. It’s best to learn about loans before signing anything. So keep reading to find out the things you need to know before you borrow.
Know that there’s likely a grace period built into having to pay back any loan. This is generally the period after graduation when the payments are due. Having this information will help you avoid late payments and penalties.
It is acceptable to miss a loan payment if serious extenuating circumstances have occurred, like loss of a job. Lenders will typically provide payment postponements. However, this can make it to where you have higher interest rates and more to pay back.
Don’t panic when you struggle to pay your loans. Job losses or unanticipated expenses are sure to crop up at least once. Remember that forbearance and deferment options are widely available on a lot of loans. Just know that the interest will build up in some options, so try to at least make an interest only payment to get things under control.
Go with the payment plan that best fits what you need. Many loans allow for a 10 year payment plan. If you don’t think that is feasible, you should check for alternatives. For instance, it may be possible to extend the loan’s term; however, that will result in a higher interest rate. You also possibly have the option of paying a set percentage of your post-graduation income. It may be the case that your loan is forgiven after a certain amount of time, as well.
Lower your principal amounts by repaying high interest loans first. It should always be a top priority to prevent the accrual of additional interest charges. Stay focused on paying the bigger loans first. Once a big loan is paid off, simply transfer those payments to the next largest ones. The best system for repaying your student loans is to make large payments on your biggest student loan while continuously making the minimum payment on smaller student loans.
Anyone on a budget may struggle with a loan. There are loan rewards programs that can help with payments. For example, you can look at SmarterBucks or LoanLink programs from Upromise. These are similar to cash back programs in which you earn rewards for each dollar you spend, and you can apply those rewards toward your loan.
Applying for a private loan with substandard credit is often going to require a co-signer. You should be sure to stay on top of your payments and never miss one. If you don’t do this, your co-signer is liable for those debts.
PLUS loans are available if you are a graduate student or the parent of one. The interest rate won’t be any larger than 8.5%. Although it is higher than Perkins and Stafford Loans, you still get a much better rate than one that is private. This is often a good alternative for students further along in their education.
Student loans come with a lot of variables. Your decisions can benefit you or haunt you forever. Make smart choices and only take out the loans you absolutely need.