Student loans enable countless people to attend higher education that they may not be able to attend otherwise. On the other hand, loans need not be taken lightly and without knowing what you are doing. The information below can help you sort things out and make educated decisions about your financial and academic future.
If you lose your job, face financial issues or some other bump in the road comes up, don’t worry about missing a payment. Most lenders will let you postpone payments when experiencing hardship. This might increase your interest rate, though.
Don’t panic if you aren’t able to make a loan payment. Unforeseen circumstances such as unemployment or health issues could happen. There are options that you have in these situations. Just remember that interest will continue to build in many of these options, so try to at least make payments on the interest to prevent your balance from growing.
Pay attention to how long the grace period is after your graduation before you student loan has to be repaid. Stafford loans provide a six month grace period. Perkins loans give you nine months. Make sure to contact your loan provider to determine the grace period. Be sure you know exactly when you will be expected to begin paying, and don’t be late!
Prioritize your repayment of student loans by the interest rate of each one. Pay off the highest interest student loans first. Paying a little extra each month can save you thousands of dollars in the long run. There are no penalties for paying off a loan more quickly than warranted by the lender.
Reduce the principal when you pay off the biggest loans first. The lower the principal amount, the lower the interest you will owe. Therefore, target your large loans. Continue the process of making larger payments on whichever of your loans is the biggest. When you make minimum payments against all your loans and pay as much as possible on the largest one, you can eventually eliminate all your student debt.
The Stafford and Perkins loans are the best options in federal loans. They are the safest and are also affordable. They are great because while you are in school, your interest is paid by the government. The Perkins loan interest rate is 5%. Subsidized Stafford Loans will have an interest rate that goes no higher than 6.8 percent.
If you try to get private loans with poor credit, you are sure to need a co-signer. You must pay them back! If you can’t pay, your co-signer will also be liable.
Parents and graduate students can make use of PLUS loans. The interest doesn’t rise above 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.
The fact is that most students couldn’t afford a higher education without any student loans. But, when you are not educated on repayment and securing a loan, disaster can occur. Use this article as a resource to keep you on course.