Student loans can lead to a dream education, but that can turn into a nightmare if you’re not smart about it. You need to learn more about loans before you sign anything. Keep reading and you’ll get all the information you need about this subject.
Know that there’s likely a grace period built into having to pay back any loan. The grace period is the period between when you graduate and when you have to start paying back your loans. Staying aware of when this period ends is the right way to make sure you never have late payments.
Keep in touch with the lender you’re using. Anytime there are changes to your personal information such as where you live, phone number, or email, it is important they are updated right away. Anytime you receive a phone call, email or paper letter from your lender, pay attention to it as soon as it is received. Make sure you take action whenever it is needed. You can end up spending more money than necessary if you miss anything.
Attend to your private college financing in a timely manner. There is not as much competition for this as public loans. A private student loan has less competition due to many people being unaware that they exist. Research community resources for private loans that can help you pay for books and other college necessities.
Never panic when you hit a bump in the road when repaying loans. Anything can come up and interfere with your ability to pay, such as a medical emergency or getting laid off from work. 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.
If you are in the position to pay down your student loans, make the high interest loans your first priority. If you focus on balances instead, you might neglect how much interest you accrue over time, still costing you money.
Make sure you understand the true length of your grace period so that you do not miss payments. Stafford loans offer a period of six months. Perkins loans have a nine-month grace period. Different loans will be different. Know what you have to pay when, and pay on time!
Choose your payment option wisely. Many student loans offer 10-year payment plans. There are other options if you can’t do this. The longer you wait, the more interest you will pay. Also, paying a percent of your wages, once you start making money, may be something you can do. Sometimes you may get loan forgiveness after a period of time, often 25 years.
Make sure your payment option fits your specific situation. Most loans have a 10-year repayment plan. You may discover another option that is more suitable for your situation. For instance, you might secure a longer repayment term, but you will end up paying more in interest. Therefore, you should pay it once you make money. Some student loans are forgiven once twenty five years have gone by.
Prioritize your repayment of student loans by the interest rate of each one. The one carrying the highest APR should be dealt with first. Apply any extra dollars you have to pay off student loan balances faster. Speeding up repayment will not penalize you.
Reduce the principal when you pay off the biggest loans first. As your principal declines, so will your interest. Pay those big loans first. Continue the process of making larger payments on whichever of your loans is the biggest. By keeping all current and paying the largest down totally first, you will more quickly rid yourself of debt.
Increase your credit hours if possible. You will graduate more quickly if you get to 15 or 18 hours each semester rather than 9 or 12. This helps you reduce the amount you need to borrow.
Student loans can be complicated, so it is important to learn as much as you can. You will be paying off your loans for many years to come, so you want to be smart about the process. Borrowing properly is best, so use the tips above when dealing with student loans.