Student loan nightmare stories are becoming all too common. You may wonder how people get is such a huge financial mess. It’s quite easy actually. Just keep signing on that line without understanding the terms you are agreeing to and it will add up to one big expensive mistake. So keep these tips in mind before you sign.
Learn about your loan’s grace period. This usually refers to the amount of time you are allowed after you graduate to pay back the loan. Knowing this will give you a head start on getting your payments in on time and avoiding hefty penalties.
Don’t panic if you aren’t able to make a loan payment. You could lose a job or become ill. Do know that you have options like deferments and forbearance available in most loans. Remember that interest accrues in a variety of ways, so try making payments on the interest to prevent balances from rising.
Be careful when consolidating loans together. The total interest rate might not warrant the simplicity of one payment. Also, never consolidate public student loans into a private loan. You will lose very generous repayment and emergency options afforded to you by law and be at the mercy of the private contract.
Be aware of the amount of time alloted as a grace period between the time you complete your education and the time you must begin to pay back your loans. For Stafford loans, the period is six months. It is about nine months for Perkins loans. Other kinds of loans may have other grace periods. Know what you have to pay when, and pay on time!
If you want to apply for a student loan and your credit is not very good, you should seek out a federal loan. This is because these loans are not based on your credit score. These loans are also good because they offer more protection for you in the event that you become unable to pay it back right away.
Get a payment option that works for you. Many student loans offer 10-year payment plans. Other options are likely to be open to you if this option does not suit your needs. You might be able to extend the plan with a greater interest rate. After you begin to make money, you might be able to use a certain percentage of that income to help pay down the student loan. There are even student loans that can be forgiven after a period of twenty five years passes.
Having to make a monthly student loan payment is hard for a budget that is already stretched thin. A good loan rewards program can make it all more manageable. Look at programs like SmarterBucks and LoanLink via Upromise. Similar to popular cash-back programs, each dollar spent accrues rewards that are applied against your loan balance.
To use your student loan money wisely, shop at the grocery store instead of eating a lot of your meals out. Every dollar counts when you are taking out loans, and the more you can pay of your own tuition, the less interest you will have to pay back later. Saving money on lifestyle choices means smaller loans each semester.
If you have yet to secure a job in your chosen industry, consider options that directly reduce the amount you owe on your loans. For example, volunteering for the AmeriCorps program can earn as much as $5,500 for a full year of service. Serving as a teacher in an underserved area, or in the military, can also knock off a portion of your debt.
To stretch your student loan as far as possible, talk to your university about working as a resident advisor in a dormitory after you have finished your first year of school. In return, you get complimentary room and board, meaning that you have fewer dollars to borrow while completing college.
To get a better interest rate on your student loan, go through the federal government instead of a bank. The rates will be lower, and the repayment terms can also be more flexible. That way, if you don’t have a job right after graduation, you can negotiate a more flexible schedule.
To make sure that your student loan dollars go as far as possible, buy a meal plan that goes by the meal rather than the dollar amount. You can prevent yourself from getting charged for dining hall extras, since you will just pay a flat fee for every meal you have.
To stretch your student loan dollars as far as possible, make sure you live with a roommate instead of renting your own apartment. Even if it means the sacrifice of not having your own bedroom for a couple of years, the money you save will come in handy down the road.
If you want to see your student loan dollars go farther, cook your meals at home with your roommates and friends instead of going out. You’ll spend less on the food, and a lot less on the alcohol or soft drinks that you buy at the store instead of ordering from a server.
To make collecting your student loan as user-friendly as possible, make sure that you have notified the bursar’s office at your institution about the coming funds. If unexpected deposits show up without accompanying paperwork, there is likely to be a clerical mistake that keeps things from working smoothly for your account.
Making educated decisions about student loans is the best way to avoid financial disaster. It can also keep you from making a costly mistake that will follow you for decades. So remember the tips from above, don’t be afraid to ask questions and always understand what you are are signing up for.
