Incurring student loan debt is something that should never be done lightly or without careful consideration, but that often is. Countless individuals who failed to research the subject in advance have found themselves in dire straits down the road. Fortunately, the information below is intended to provide a great foundation of knowledge to help any student borrow wisely.
Always know the pertinent details of your loans. You must watch your loan balances, check your repayment statuses, and know your lenders. These details all affect loan forgiveness and repayment options. Budgeting is only possible with this knowledge.
Be sure you know about the grace period of your loan. Each loan has a different grace period. It is impossible to know when you need to make your first payment without looking over your paperwork or speaking with your lender. Be sure to be aware of this information so you do not miss a payment.
Private financing is one choice for paying for school. There is not as much competition for this as public loans. Private loans – especially small ones – do not have as much competition, and this means that there is funding available that most other people don’t even know about. Speak with the people in your area to find these loans, which can cover books and room and board at least.
Try shopping around for your private loans. If you need to borrow more, discuss this with your adviser. If a private or alternative loan is your best bet, make sure you compare items like repayment options, fees, and interest rates. Your school may recommend some lenders, but you’re not required to borrow from them.
If at all possible, sock away extra money toward the principal amount. The key is to notify your lender that the additional money must be applied toward the principal. Otherwise, the money will be applied to your future interest payments. Over time, paying down the principal will lower your interest payments.
Far too often people will rush into signing the student loan paperwork without carefully analyzing the terms and conditions of the loan. Ask questions so you can clear up any concerns you have. This is a simple way for the lender to receive a bit more money than they are entitled to.
When calculating how much you can afford to pay on your loans each month, consider your annual income. If your starting salary exceeds your total student loan debt at graduation, aim to repay your loans within 10 years. If your loan debt is greater than your salary, consider an extended repayment option of 10 to 20 years.
Try to make your student loan payments on time. If you miss your payments, you can face harsh financial penalties. Some of these can be very high, especially if your lender is dealing with the loans through a collection agency. Keep in mind that bankruptcy won’t make your student loans go away.
Taking out student loans without sufficient understanding of the process is a very risky proposition indeed. Every prospective borrower owes it to themselves and their future mates and families to learn everything they can about the right types of loans to get and those to avoid. The tips provided above will serve as a handy reference for all.