Even high school students will start receiving student loan offers for college. You might think this is a terrific thing. This may seem great, but there are still many things you must know in order to not put yourself into too much future debt.
Make sure you stay on top of applicable repayment grace periods. The grace period is the amount of time between your graduation date and date on which you must make your first loan payment. Having this knowledge of when your payments are scheduled to begin will avoid incurring any penalties.
Be sure you know all details of all loans. You need to be able to track your balance, know who you owe, and what your repayment status is. These three details all factor heavily into your repayment and loan forgiveness options. You have to have this information if you want to create a good budget.
Do not panic if a job loss or other emergency makes paying your student loan difficult. A lot of the time a lender will allow a payment to be postponed if you show them you’re having a hard time. This might increase your interest rate, though.
Do not overlook private sources of funds for college. Public student loans are highly sought after. 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 do anything irrational when it becomes difficult to pay back the loan. Job loss and health crises are bound to pop up at one point or another. There are options such as deferments and forbearance that are available with most loans. But bear in mind that interest will still accrue, so consider making whatever payments you can to keep the balance in check.
Focus on paying off student loans with high interest rates. Calculating the terms properly will prevent spending more money than is necessary by the end of the loan.
You are offered a grace period after you graduate before you must start paying on your student loans. The period should be six months for Stafford loans. For Perkins loans, the grace period is nine months. Grace periods for other loans vary. Know precisely when you need to start paying off your loan so that you are not late.
Which payment option is your best bet? Most student loan companies allow the borrower ten years to pay them back. If this won’t work for you, there may be other options available. You might get more time with higher interest rates. Also, paying a percent of your wages, once you start making money, may be something you can do. Some balances on student loans are forgiven after a period of 25 years.
Select the payment choice that is best for you. Many student loans will offer a 10 year repayment plan. If this won’t work for you, there may be other options available. If you take a loan at a higher interest rate, for example, you can extend your time to pay. Therefore, you should pay it once you make money. Some loan balances for students are let go when twenty five years have gone by.
Prioritize your repayment of student loans by the interest rate of each one. Try to pay the highest interest loans to begin with. Do what you can to put extra money toward the loan so that you can get it paid off more quickly. There is no penalty for paying off your loans early.
Pay off your biggest loan as soon as you can to reduce your total debt. It should always be a top priority to prevent the accrual of additional interest charges. Stay focused on paying the bigger 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.
College is something that takes a lot of decision making, and there are some steps that cannot be missed. Borrowing excessively at high interest rates can cause serious problems. Keep in mind all that you read here as you prepare for both college and the future.