Some people have to go through the process of getting a student loan in order to attend the school they desire. However, many don’t understand what they are signing up for. Keep reading to learn how to protect yourself.
Be mindful of any grace period you have prior to having to repay your loan. This generally means the period after you graduate where the payments will become due. Knowing this allows you to make sure your payments are made on time so you can avoid penalties.
Communicate often with the lender. Anytime there are changes to your personal information such as where you live, phone number, or email, it is important they are updated right away. Read all of the paperwork that comes with your loan. You need to act immediately if a payment is needed or other information is required. If you miss any piece of information, you may end up spending more money.
It is acceptable to miss a loan payment if serious extenuating circumstances have occurred, like loss of a job. Usually, many lenders let you postpone payments if you are able to prove hardship. Just keep in mind that doing this might cause the lender to raise the interest rate on your loan.
Do not panic if an emergency makes paying your loans temporarily difficult. Job losses and health emergencies are part of life. There are forbearance and deferments available for such hardships. The interest will grow if you do this though.
If you are in the position to pay off student loans early and inclined to do so, make sure you begin with the loans that carry the highest rate of interest. This will reduce the total amount of money that you must pay.
Keep in mind the time that’s allotted to you as your grace period from when you get out of school until you have to start paying back the loan. The period should be six months for Stafford loans. For Perkins loans, you’ll have a nine month grace period. For other loans, the terms vary. It is important to know the time limits to avoid being late.
Select the payment option best for your particular needs. Many student loans come with a ten year length of time for repayment. If this isn’t going to help you out, you may be able to choose other options. Perhaps you can stretch it out over 15 years instead. Keep in mind, though, that you will pay more interest as a result. You can also do income-based payments after you start earning money. It may be that your loan will be forgiven after a certain period of time as well.
Pay off student loans in interest-descending order. Pay loans with higher interest rates off first. This extra cash can boost the time it takes to repay your loans. Prepayment of this type will never be penalized.
Countless people need student loans in order to reach their educational goals. The key to managing student borrowing responsibly is learning everything possible in advance of signing. Use the information located above to simplify the process.