Student loan offers often arrive in the mail long before you finish high school. It may seem like a blessing to be offered such an abundance of help towards your college goals. It is important to learn all you can before taking on a mountain of debt.
Start your student loan search by looking at the safest options first. These are generally the federal loans. They are immune to your credit rating, and their interest rates don’t fluctuate. These loans also carry some borrower protection. This is in place in case of financial issues or unemployment following your graduation from college.
Remain calm if you discover that can’t make your payments due to an unforeseen circumstance. Most lenders can work with you if you lose your job. If you take this option, you may see your interest rate rise, though.
If you have trouble repaying your loan, try and keep a clear head. Emergencies are something that will happen to everyone. Do be aware of your deferment and forbearance options. Interest continues to compound, however, so a good strategy is to make interest only payments that will prevent your balance from getting bigger.
Don’t be afraid to ask questions about federal loans. Not many people understand what these types of loans can offer or what their regulations and rules are. If you have any questions about these loans, contact your student loan adviser. Funds are limited, so talk to them before the application deadline.
Paying your student loans helps you build a good credit rating. Conversely, not paying them can destroy your credit rating. Not only that, if you don’t pay for nine months, you will ow the entire balance. When this happens the government can keep your tax refunds and/or garnish your wages in an effort to collect. Avoid all this trouble by making timely payments.
Take advantage of student loan repayment calculators to test different payment amounts and plans. Plug in this data to your monthly budget and see which seems most doable. Which option gives you room to save for emergencies? Are there any options that leave no room for error? When there is a threat of defaulting on your loans, it’s always best to err on the side of caution.
Defaulting on a loan is not freedom from repaying it. The government will often still get its money back anyway. For instance, it can claim portions of Social Security or tax return payments. The government can also lay claim to 15 percent of your disposable income. Most of the time, not paying your student loans will cost you more than just making the payments.
To get the most out of your student loan dollars, spend your free time studying as much as possible. It is good to step out for a cup of coffee or a beer now and then, but you are in school to learn. The more you can accomplish in the classroom, the wiser the loan is as an investment.
If you take out loans from multiple lenders, know the terms of each one. Some loans, such as federal Perkins loans, have a nine-month grace period. Others are less generous, such as the six-month grace period that comes with Family Education and Stafford loans. You must also consider the dates on which each loan was taken out, as this determines the beginning of your grace period.
College can give you a lot of debt over the four years you are there. You may wind up with a huge problem after school because you are faced with the possibility of paying back a big loan with an even bigger interest rate. Don’t neglect the information in this article; use it to help yourself make smart decisions.