tips to help you better understand student loans

2
Tips To Help You Better Understand Student Loans Student loans are the only vehicle to higher education for some. However, you shouldn't get into getting loans until you know exactly what getting one entails. This article will help you understand the financial options for your college education. Make it a point to be aware of all the important facets of your student loans. You need to be able to track your balance, know who you owe, and what your repayment status is. All these details are involved in both repayment options as well as forgiveness potentials. You will also need to know these things if you want to have an accurate budget. Don't panic when you struggle to pay your loans. Job loss and health crises are bound to pop up at one point or another. There are options like forbearance and deferments for most loans. Remember that interest accrues with many loans, so it's important to at least make the interest portion of your loan payments. If you are thinking about paying off any of your student loans ahead of schedule, you should focus on the ones that have the highest interest. If you pay off the wrong loans first, you could end up paying more than you need to. Get a payment option that works for you. In the majority of cases, student loans offer a 10 year repayment term. There are often other choices as well. For example, you may be able to take longer to pay; however, your interest will be higher. Also, paying a percent of your wages, once you start making money, may be something you can do. Sometimes you may get loan forgiveness after a period of time, often 25 years. Choose the payment option that is best suited to your needs. Many loans offer payment over a decade. It is possible to make other payment arrangements. For instance, you can spread your payments out over more time, but this will increase your interest. You may also have to pay back a percentage of the money you make when you get a job. It may be that your loan will be forgiven after a certain period of time as well.

Upload: hughesncmrzagolj

Post on 11-Aug-2015

14 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Tips To Help You Better Understand Student Loans

Tips To Help You Better Understand Student Loans

Student loans are the only vehicle to higher education for some. However, you shouldn't get intogetting loans until you know exactly what getting one entails. This article will help you understandthe financial options for your college education.

Make it a point to be aware of all the important facets of your student loans. You need to be able totrack your balance, know who you owe, and what your repayment status is. All these details areinvolved in both repayment options as well as forgiveness potentials. You will also need to knowthese things if you want to have an accurate budget.

Don't panic when you struggle to pay your loans. Job loss and health crises are bound to pop up atone point or another. There are options like forbearance and deferments for most loans. Rememberthat interest accrues with many loans, so it's important to at least make the interest portion of yourloan payments.

If you are thinking about paying off any of your student loans ahead of schedule, you should focus onthe ones that have the highest interest. If you pay off the wrong loans first, you could end up payingmore than you need to.

Get a payment option that works for you. In the majority of cases, student loans offer a 10 yearrepayment term. There are often other choices as well. For example, you may be able to take longerto pay; however, your interest will be higher. Also, paying a percent of your wages, once you startmaking money, may be something you can do. Sometimes you may get loan forgiveness after aperiod of time, often 25 years.

Choose the payment option that is best suited to your needs. Many loans offer payment over adecade. It is possible to make other payment arrangements. For instance, you can spread yourpayments out over more time, but this will increase your interest. You may also have to pay back apercentage of the money you make when you get a job. It may be that your loan will be forgivenafter a certain period of time as well.

Page 2: Tips To Help You Better Understand Student Loans

When it comes time to pay back your student loans, paythem off from higher interest rate to lowest. Go after highinterest rates before anything else. Using your extra cashcan help you get these student loans paid off quicker.Paying quicker than expected won't penalize you in anyway.

One type of student loan that is available to parents andgraduate students is the PLUS loans. The interest ratewon't be any larger than 8.5%. It's higher than publicloans, but lower than most private options. It's a goodoption for students pursuing higher education.

Keep in mind that the school you attend could have ahidden agenda when it comes to them recommending youto a lender. Some colleges allow lending companies touse the name of the college. Such tactics are oftenmisleading. The school might be getting payment if youchoose to go with certain lenders. Understand the termsof the loan before you sign the papers.

Going into default on your loans is not a wise idea. The federal government can recover that moneyin a few different ways. A couple of tactics they use to collect the money you owe is taking some taxreturn money, Social Security and even wage garnishment at your job. The government may also tryto take up around 15 percent of the income you make. You could end up worse off that you werebefore in some cases.

Take extra care with private loans. It can prove difficult to find out what the exact terms are. Inmany cases, you won't know until you've signed the contract. If there are terms you find unfavorableat this point, then it can be really hard to back out of the deal. Get all the necessary information.When getting a good offer, look at some other lenders to figure out if they match or surpass it.

To extend to value of your loan money, try to get meal plans that do not deduct dollar amounts, butrather include whole meals. That way, you won't be overpaying for extra items in the cafeteria. Youwill just pay a flat fee for every meal.

Keep in touch when you have a lender that's giving you money. This is important as you will want toknow all of the information on your loan and what stipulations are involved in your payback plan.The lender could also teach you some things about how you're going to repay your debt.

Student loans make it much easier for students to afford a college education. Thankfully, you nowunderstand how to properly secure a student loan thanks to the information learned in the abovearticle. Utilize the tips above to keep things on course.