Student loans make college education possible, but they are high risk if you don’t manage them wisely. So it is recommended that you educate yourself about any student loan before signing the contract. Read on to learn all you can before borrowing.
Learn about your loan’s grace period. This is the amount of time you are allowed after graduation before you loan becomes due. This can also give you a big head start on budgeting for your student loan.
Know all the little details of your student loans. You need to stay on top of your balances, your lenders and the repayment status in which you find yourself at any given time. These facts will determine your loan repayment and forgiveness options. This is necessary so you can budget.
If you want to pay off student loans before they come due, work on those that carry higher interest rates. If you think you will be better off paying the one with the highest monthly payments first, you may be wrong. Best to look at the interest rates.
When you graduate, know how much time you have before you have to start making payments on your loans. For Stafford loans, you should have six months. Perkins loans give you nine months. Other kinds of loans may have other grace periods. Know when you will have to pay them back and pay them on time.
Pick out a payment option that you know can meet the needs you have. In the majority of cases, student loans offer a 10 year repayment term. If these do not work for you, explore your other options. For instance, you might have an option of paying over more years at the trade-off of higher interest. Once you start working, you may be able to get payments based on your income. It may be the case that your loan is forgiven after a certain amount of time, as well.
Pick a payment plan that works best for you. Many student loans offer 10 year payment plans. If this isn’t going to help you out, you may be able to choose other options. For instance, you can possibly spread your payments over a longer period of time, but you will have higher interest. You may also have to pay back a percentage of the money you make when you get a job. Certain student loan balances just get simply forgiven after a quarter century has gone by.
Prioritize your loan repayment schedule by interest rate. Begin with the loan that has the highest rate. Using any extra cash available can help pay off student loans faster. There is no penalty for early repayment.
Clearly, many aspects of student loans are there to be learned. The choices you make now can have big implications on your life, even well after you graduate from school. Smart borrowing is the way to go, and the tips in the above article should be remembered when you go to apply for a student loan.