There are many people who were ruined when they took on too much student loan debt. Unfortunately, this situation is all too common among young folks. The following piece details what you need to know.
Know that there’s likely a grace period built into having to pay back any loan. Usually, there is a time period after you leave school before you must begin paying the loans. Knowing this can help you avoid hefty penalties by paying on time.
Read the fine print on student loans. Stay on top of what your balance is and know which lender you borrowed from, plus what your repayment status is. This helps when it comes to payment plans and forgiveness options. Budgeting is only possible with this knowledge.
You don’t need to panic if a problem arises during repayment of your loans. Job losses or unanticipated expenses are sure to crop up at least once. There are options such as deferments and forbearance that are available with most loans. Just know that the interest will build up in some options, so try to at least make an interest only payment to get things under control.
Grace Period
Your loans are not due to be paid back until your schooling is complete. Make sure that you find out the repayment grace period you are offered from the lender. Stafford loans provide a six month grace period. For Perkins loans, the grace period is nine months. Make sure to contact your loan provider to determine the grace period. This is important to avoid late penalties on loans.
Choose a payment option based on your circumstances. Many loans offer payment over a decade. There are other ways to go if this is not right for you. Perhaps you can stretch it out over 15 years instead. Keep in mind, though, that you will pay more interest as a result. You may also have to pay back a percentage of the money you make when you get a job. Sometimes student loans are written off after an extended period of time.
If you have more than one student loan, pay each off according to interest rates. You should pay off the loan that has the highest interest first. Use extra funds to pay down loans more quickly. There is no penalty for repaying sooner than expected.
Largest Loan
Reduce the principal when you pay off the biggest loans first. The smaller your principal, the smaller the amount of interest that you have to pay. Set your target on paying down the highest balance loans first. After you have paid off your largest loan, continue making those same payments on the next loan in line. By making minimum payments on all of your loans and the largest payment possible on your largest loan, you will systematically eliminate your student loan debt.
After graduating from college, many people find themselves saddled with immense amounts of debt. For that reason, anyone contemplating borrowing money to finance their education must pay close attention to what they are doing. Use what you’ve just learned to take advantage of student loans without negatively affecting your future.
