Jennifer Smith Posted on 11:46 am

Adive Every College Student Should Know: Loans

Student loans are something that you may be forced to consider. Lenders aren’t always keeping your best interests in mind, though. Here are some of the basics that you need to know.

Don’t let setbacks throw you into a tizzy. Job losses and health emergencies are part of life. There are options that you have in these situations. Just remember that interest is always growing, so making interest-only payments will at least keep your balance from rising higher.

Select a payment option that works best for your situation. The average time span for repayment is approximately one decade. If this isn’t going to help you out, you may be able to choose other options. For instance, you might secure a longer repayment term, but you will end up paying more in interest. You can also do income-based payments after you start earning money. On occasion, some lenders will forgive loans that have gone unpaid for decades.

Interest Rates

Pay off your loans in order of interest rates. You should always focus on the higher interest rates first. Using additional money to pay these loans more rapidly is a smart choice. There is no penalty for repaying sooner than expected.

Monthly loan payments after college can be very intimidating. Loan rewards programs soften the blow somewhat. Places to check out are SmarterBucks and LoanLink which are programs available from Upromise. The are akin to cash back incentives, and the money spent works like a reward you can use toward your loan balance.

Get the maximum bang for the buck on your student loans by taking as many credits each semester as you can. As much as 12 hours during any given semester is considered full time, but if you can push beyond that and take more, you’ll have a chance to graduate even more quickly. This lets you minimize the loan amounts you have to accrue.

Lots of folks enter into student loans without having the foggiest idea of what they are signing on for. You must ask the right questions to clarify what you don’t understand. This is one way a lender may collect more payments than they should.

Fill out your paperwork the best that you can. Giving incorrect information can cause the process to be delayed, resulting in having to start school later.

Perkins Loans

The Stafford and Perkins loans are good federal loans. They are the safest and most economical. They are a great deal since the government pays your interest while you’re studying. Perkins loans have an interest rate of 5%. On Stafford loans that are subsidized, the loan will be fixed and no larger than 6.8%.

Remember your school could have some motivation for recommending certain lenders to you. Many institutions allow selected private lenders to use the school name in their promotions. This is generally misleading. The school may receive some sort of payment if you agree to go with a certain lender. It is important that you understand the entire loan contract before agreeing to it.

It’s tempting to do it, but you should never make student loans the only path of paying for your schooling. Just save your money and try to get as many grants as you can. You may find some that will match your other funding sources. Make sure you start looking as early as possible so you can have everything in order well before it is time to pay for school.

Student loans are the major reason many people are even able to afford higher education. The main thing to do would be to borrow responsibly and learn everything there is to know before signing anything. These suggestions should benefit you.