Student loans make college education possible, but they are high risk if you don’t manage them wisely. So it is recommended that you educate yourself about any student loan before signing the contract. Keep reading to learn all you need to personally know.
Learn about your loan’s grace period. The grace period is the time you have between graduation and the start of repayment. You can use this time to start saving up for some initial payments, getting you ready to avoid any penalties.
Do not panic if a job loss or other emergency makes paying your student loan difficult. Most lenders will let you postpone payments when experiencing hardship. Just know that taking advantage of this option often entails a hike in your interest rates.
Pay your loans off using a two-step process. First you need to be sure that you know what the minimum payments for the loans will be each month. If you have money left over, apply that to the loan that has the highest interest associated with it. You will reduce how much it costs in the long run.
Know how much time you have in your grace period from the time you leave school until you must begin paying back your loans. For Stafford loans, you should have six months. Perkins loans give you nine months. There are other loans with different periods. Understand when your first payments will be due so that you can get on a schedule.
Choose your payment option wisely. Most student loan companies allow the borrower ten years to pay them back. There are other options if you can’t do this. For example, you might be given a longer time to pay. Keep in mind that this option comes with higher interest. Additionally, some loans offer a slightly different payment plan that allows you to pay a certain percent of your income towards your debt. Sometimes you may get loan forgiveness after a period of time, often 25 years.
Anyone on a budget may struggle with a loan. Loan programs with built in rewards will help ease this process. Places to check out are SmarterBucks and LoanLink which are programs available from Upromise. This can help you get money back to apply against your loan.
Stafford and Perkins are the best loan options. These are both safe and affordable. These are great options because the government handles your interest while you are in school. The Perkins loan carries an interest rate of 5%. Subsidized Stafford loans have a fixed rate of no more than 6.8 percent.
If you need for a student loan and do not have good credit, you may need a cosigner. You must then make sure to make every single payment. If you can’t pay, your co-signer will also be liable.
Some schools have reasons that they may try to motivate you to go toward one particular lender to get a student loan. Certain schools let private lenders use the name of the school. This can lead to misunderstandings. The school may get some kind of a payment if you go to a lender they are sponsored by. Understand every aspect of your loan right off the bat.
There is a lot to keep in mind when looking for student loans. Your decisions will affect the rest of your life, long after you graduate. Be a smart borrower.