As a soon-to-be college student (or the proud parent of one), the prospect of taking out student loans can be intimidating. Grants and scholarships are great if you can get them, but they don’t always cover the full cost of tuition and books. Before you sign on the line, carefully consider your options and know what to expect.
Be sure your lender knows where you are. Keep your contact information updated to avoid fees and penalties. Always stay on top of your mail so that you don’t miss any important notices. If you fall behind on payments, be sure to discuss the situation with your lender and try to work out a resolution.
Go with the payment plan that best fits what you need. Most student loan companies allow the borrower ten years to pay them back. There are other choices available if this is not preferable for you. You might get more time with higher interest rates. You can put some money towards that debt every month. Sometimes you may get loan forgiveness after a period of time, often 25 years.
When you begin to pay off student loans, you should pay them off based on their interest rates. Try to pay the highest interest loans to begin with. Using the extra money you have can get these things paid off quicker later on. Student loans are not penalized for early payoff.
Sometimes consolidating your loans is a good idea, and sometimes it isn’t When you consolidate your loans, you will only have to make one big payment a month instead of lots of little ones. You may also be able to lower your interest rate. Be certain that any loan you take out to consolidate your student loans offers you the same variety and flexibility in borrower benefits, deferments and payment options.
Try getting your student loans paid off in a 10-year period. This is the traditional repayment period that you should be able to achieve after graduation. If you struggle with payments, there are 20 and 30-year repayment periods. The drawback to these is that they will make you pay more in interest.
Many people apply for student loans and sign paperwork without really understanding what they are getting into. Ask to get clarification on anything you don’t understand. This is an easy way for a lender to get more money than they are supposed to.
The unsubsidized Stafford loan is a good option in student loans. Anyone with any level of income can get one. The interest is not paid for your during your education; however, you will have 6 months grace period after graduation before you have to start making payments. This kind of loan offers standard federal protections for borrowers. The fixed interest rate is not greater than 6.8%.
Banish the notion that defaulting on your student loans means freedom from debt. The government has several collection tools at its disposal. The federal government can garnish your taxes and disability payments. The government even has the right to take up to fifteen percent of what it deems your disposable income. Many times you will put yourself in an even worse situation.
If you are having a hard time paying back your student loan, you should check to see if you are eligible for loan forgiveness. This is a courtesy that is given to people that work in certain professions. You will have to do plenty of research to see if you qualify, but it is worth the time to check.
Student loans that come from private entities like banks often come with a much higher interest rate than those from government sources. Remember this when applying for funding, so that you do not end up paying thousands of dollars in extra interest expenses over the course of your college career.
Make sure that you understand the serious implications with taking a student loan. This means that you should not miss too many payments, as it could lead to delinquency and default. This can greatly impact your credit score and could prevent you from getting more loans that you need in the future.
Be certain all of your paperwork is correct. It is important that your lenders know where to reach you at all times. Read your entire agreement and be sure you understand it. If you find errors, attend to them right away. Provide any requested information in a timely manner. Begin paying back your student loans promptly.
To get the most out of your student loan dollars, consider commuting from home while you attend university. While your gasoline costs might be a bit higher, your room and board costs should be significantly lower. You won’t have as much independence as your friends, but your college will cost much less.
Let your lender know if you think you will have trouble repaying. It is better to make plans in advance than put out fires in retrospect. Your lender may be able to help you come up with a solution to your problem. After all, it is better for the lender if you do well on your loan.
Remember that you may be able to deduct some of your student loan interest from your income taxes. As much as $2500 may be deductible. This is a significant reduction of your tax bill. If you get it back in the form of a refund, put it toward your student loan to help you pay off your principle faster and reduce your interest rates.
Take advantage of software such as free management tools for your student loans, calenders and budgeting apps. There are even specific student loan managing tools that help make your life easier. Reminders will help you keep up with your payments and budgeting tools will help you make the most of your student loan money.
The better your understanding of student loans, the more confident you can be in your decision. Paying for college is a necessary evil, but the benefits of an education are undeniable. Use everything you’ve learned here to make smart, responsible decisions about student loans. The faster you can get out of debt, the sooner you can earn a return on your investment.
