Student loans are a necessity for getting undergraduate and advanced degrees. Unfortunately, lots of borrowers take out loans without really knowing the facts. Read on to learn how you can avoid being taken advantage of when seeking financing for your education.
Always figure out what the details of the loans you have out are. Keep track of this so you know what you have left to pay. These three details all factor heavily into your repayment and loan forgiveness options. This is must-have information if you are to budget wisely.
The best way to pay down your student loan debt early is to focus on the loans that come with a higher interest rate. Calculating the terms properly will prevent spending more money than is necessary by the end of the loan.
Pick a payment plan that works best for you. Most student loans allow for repayment over ten years. If this won’t do, then there are still other options. If it takes longer to pay, you will face a higher interest charge. Another option some lenders will accept is if you allow them a certain percentage of your weekly wages. After 20 years, some loans are completely forgiven.
When paying off your student loans, try paying them off in order of their interest rates. Try to pay the highest interest loans to begin with. Anytime you have extra cash, apply it toward your student loans. Prepayment of this type will never be penalized.
For those on a budget already stretched to the max, the idea of a student loan can be scary. That can be reduced with loan rewards programs. LoanLink and Upromise are two of these great programs. These are essentially programs that give you cash back and applies money to your loan balance.
Take more credit hours to make the most of your loans. Though full-time student status requires 9-12 hours only, if you are able to take 15 or more, you will be able to finish your program faster. This helps reduce the total of loans.
The Stafford and Perkins loans are good federal loans. These are the most affordable and the safest. These are good loans because the government pays the interest while you are still in school. The Perkins tends to run around 5%. On a subsidized Stafford loan, it will be a fixed rate of no larger than 6.8 percent.
PLUS loans are a type of loan option for parents and graduate students. The interest rate won’t be any larger than 8.5%. It’s higher than public loans, but lower than most private options. These loans are much better suited to an older student that is at graduate school or is close to graduating.
Keep in mind that your school could have other motivations when they recommend certain lenders. Some colleges permit private lenders to utilize the name of the school. This can be very misleading. The school might get an incentive if you use a certain lender. Know the terms and conditions of any loan you are considering before you sign anything.
Do not think that defaulting will relieve you from your student loan debts. The government will come after you. Claiming part of your income tax return or your Social Security payments are only two examples. It can also claim 15 percent of your disposable income. Therefore, defaulting is not a good solution.
Use caution when getting a private loan. These can be tricky when it comes to the specifics surrounding the terms. Sometimes, you may not know until it is too late. After this happens, you may not be able to extricate yourself. Learn all that you can prior to signing. If a good offer comes your way, ask other loan providers if they can match or beat it.
For many people, student loans are in important part of college. The key is learning everything you can about student loans before you need them. Use the advice you were given here if you want to make the process easier on yourself.