Have you seen the cost of college recently? If so, you know how pricey it is. Most families simply can’t pay for it all by themselves. If finding a way to pursue higher education is important to you, take a look at student loans.
If an issue arises, don’t worry. Anything can come up and interfere with your ability to pay, such as a medical emergency or getting laid off from work. Know that there are options available such as a forbearance or deferment. Keep in mind that interest often continues accruing, so do your best to at least make interest payments to keep from having a larger balance.
Pay off all your student loans using two steps. The first thing you need to do is be certain that you are making the minimum required monthly payment on each loan. If you have money left over, apply that to the loan that has the highest interest associated with it. This will keep your total expenditures to a minimum.
If you are in the position to pay down your student loans, make the high interest loans your first priority. You may think to focus on the largest one but, the accruing interest will add up to more over time.
Know how long the grace period is between the date of your graduation and the date on which you must start repaying the loans. Stafford loans typically give you six months. If you have Perkins loans, you will have 9 months. Other loans will vary. Do you know how long you have?
When the time comes to repay student loans, pay them off based on their interest rate. You should pay off the loan that has the highest interest first. Make extra payments so you can pay them off even quicker. There are no penalties for paying off a loan faster.
Pay off your biggest loan as soon as you can to reduce your total debt. The less principal that is owed, the less you’ll have to pay in interest. It is a good idea to pay down the biggest loans first. After you’ve paid off a large loan, you can transfer your payments to the second largest one. Making these payments will help you to reduce your debt.
You can stretch your dollars further for your student loans if you make it a point to take the most credit hours as you can each semester. Generally, being a full-time student is seen as 9 to 12 hours per semester, but if you can squeeze in between 15 or 18, then you should be able to graduate sooner. This helps you minimize the amount of your loans.
The Stafford and Perkins loans are good federal loans. This is because they come with an affordable cost and are considered to be two of the safest loans. These are good loans because the government pays the interest while you are still in school. The Perkins loan interest rate is 5%. Stafford loans offer interest rates that don’t go above 6.8%.
Some schools get a kickback on certain student loans. For example, there are schools that allow the use of their name by select private lenders. This is misleading. A school might get a kickback for you signing up for that lender. Therefore, don’t blindly put your trust in anything; do your own research.
Going into default on your loans is not a wise idea. There are various ways that your finances can suffer because of unpaid student loans. The federal government can take your Social Security payments or take your tax refunds if money is owed. They can also tap into your disposable income. This can put you in a position that’s worse than the one you were in to begin with.
Be wary of private student loans. Many times, it is difficult to ascertain exactly what the terms are. In many cases, you won’t know until you’ve signed the contract. Once that happens, you may find it difficult to get out of the agreement. Fully understand the terms before signing on the dotted line. Always check to see if you can get a better deal.
Though a student loan can help people attend college, remember that they need to be repaid. Some people get a student loan without thinking much about eventually paying off the debt. The tips you have read here can help you avoid getting into trouble with student loans.