The process of acquiring, managing and ultimately repaying student loans is one that is sometimes shrouded in a bit of mystery. Fortunately, by taking the time to gain a good amount of knowledge, the entire task can be demystified, and even simplified to a great extent. The article below is intended to help potential borrowers learn more.
If you are having a hard time paying back your student loans, call your lender and let them know this. There are normally several circumstances that will allow you to qualify for an extension and/or a payment plan. You will have to furnish proof of this financial hardship, so be prepared.
If you were laid off or are hit with a financial emergency, don’t worry about your inability to make a payment on your student loan. When hardship hits, many lenders will take this into consideration and give you some leeway. Just keep in mind that doing this might cause the lender to raise the interest rate on your loan.
Do not hesitate to “shop” before taking out a student loan. Just as you would in other areas of life, shopping will help you find the best deal. Some lenders charge a ridiculous interest rate, while others are much more fair. Shop around and compare rates to get the best deal.
If you wish to repay student loans in advance, deal with the ones with the highest interest rates first. If your payment is based on what loans are the highest or lowest, there’s a chance you’ll be owing more at the end.
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.
Choose your payment option wisely. Many of these loans offer a ten year repayment period. If you don’t think that is feasible, you should check for alternatives. You might be able to extend the plan with a greater interest rate. Once you start working, you may be able to get payments based on your income. The balances on some student loans have an expiration date at 25 years.
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.
Reduce the total principal by getting things paid off as fast as you can. When you owe less principal, it means that your interest amount owed will be less, too. It is a good idea to pay down the biggest loans first. Once it is gone, you can focus on smaller loans. 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.
If at all possible, sock away extra money toward the principal amount. The key is to notify your lender that the additional money must be applied toward the principal. Otherwise, the money will be applied to your future interest payments. Over time, paying down the principal will lower your interest payments.
PLUS student loans are offered to parents and graduate students. They have a maximum interest rate of 8.5 percent. This is a bit higher than Perkins and Stafford loans, but the rates are better for private loans. This is often a good alternative for students further along in their education.
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 bring in the greatest returns on your student loan, get the most out of each day at school. Instead of sleeping in until a few minutes before class, and then running to class with your binder and notebook flying, wake up earlier to get yourself organized. You’ll get better grades and make a good impression.
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.
When you are filling out your financial aid application, make sure that you are positive there are no errors on it. Your accuracy may have an affect on the amount of money you can borrow. If you have any questions with regard to completing the loan forms, check with someone in the financial aid department at your school.
It is impossible to deny the fact that student loans are increasingly necessary for almost anyone who wishes to afford higher education. The key to handling such loans in a responsible manner lies with studying the subject and taking deliberate, savvy steps. Re-read this article as necessary to be a smart student loan borrower now and for the years to come.