College expenses continue to soar and students are increasingly turning to student loans to finance their education. But the mistakes you make as a young college student can affect your later life so always make sure you understand the terms you are agreeing to. Keep reading to learn other ways to avoid costly student loan mistakes.
Start your student loan search by looking at the safest options first. These are generally the federal loans. They are immune to your credit rating, and their interest rates don’t fluctuate. These loans also carry some borrower protection. This is in place in case of financial issues or unemployment following your graduation from college.
Keep in close touch with your lender. Make sure they know your current address and phone number. Be certain you always open mail that comes from your lender, and that includes e-mail. Make sure that you take all actions quickly. You may end up spending more money otherwise.
Private financing is always an option. While you can easily find public ones, they have a lot of competition since they’re in demand. Many people do not know about private loans; therefore, they are usually easier to get. Check out this type of funding in your community, and you might get enough to cover your books for one semester or maybe even more.
Be careful when consolidating loans together. The total interest rate might not warrant the simplicity of one payment. Also, never consolidate public student loans into a private loan. You will lose very generous repayment and emergency options afforded to you by law and be at the mercy of the private contract.
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.
The Perkins Loan and the Stafford Loan are both well known in college circles. They are the safest and are also affordable. These are great options because the government handles your interest while you are in school. The Perkins tends to run around 5%. Subsidized Stafford Loans will have an interest rate that goes no higher than 6.8 percent.
Defaulting on a loan is not freedom from repaying it. Unfortunately if you do this, the federal government will use all means necessary to recover this debt. They can take money off your tax refund, for example. They can also take money out of your paycheck. Many times you will put yourself in an even worse situation.
Make sure you stay current with all news related to student loans if you currently have student loans. Doing this is just as important as paying them. Any changes that are made to loan payments will affect you. Keep up with the latest student loan information on websites like Student Loan Borrower Assistance and Project On Student Debt.
Limit the amount you borrow for college to your expected total first year’s salary. This is a realistic amount to pay back within ten years. You shouldn’t have to pay more then fifteen percent of your gross monthly income toward student loan payments. Investing more than this is unrealistic.
If you are having a hard time paying back your student loan, you should check to see if you are eligible for loan forgiveness. This is a courtesy that is given to people that work in certain professions. You will have to do plenty of research to see if you qualify, but it is worth the time to check.
If possible, maintain a job while you are attending school. You may be able to pay for some things yourself, and you will have a little extra money to hang out with friends.
Contact the lender if you are unable to make payments. You are more likely to get your lender to help you if you are honest with them. You might be able to lower your payments or take a few months off.
Private loans are generally more stringent and do not offer all of the options that federal loans do.This can mean a world of difference when it comes to repayment and you are unemployed or not making as much as you expected. So don’t expect that all loans are the same because they vary widely.
As you explore your student loan options, consider your planned career path. Learn as much as possible about job prospects and the average starting salary in your area. This will give you a better idea of the impact of your monthly student loan payments on your expected income. You may find it necessary to rethink certain loan options based on this information.
Take advantage of graduated payments on your student loans. With this arrangement, your payments begin small and then increase bi-annually. In this way, you can pay off your loans faster as you gain more skill and experience in the work world and your salary increases. This is just one of many ways to reduce the amount of interest you pay in total.
Set a goal to fund your education with a combination of student loans and scholarships, which do not need to be repaid. The Web is filled with contests and opportunities to earn money for school based on any number of factors unrelated to financial need. These include scholarships for single parents, individuals with disabilities, non-traditional students and others.
To ensure that you get the best use of your student loan dollars, take as many credit hours as you can without sacrificing the quality of your academic performance. Full-time students are taking 12 or more hours, but most universities do not charge for more hours after reaching full-time status, so take advantage and pack the classes in.
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