Great Tips For Paying Off Your Student Loans
Great Tips For Paying Off Your Student Loans
Student loans can lead to a dream education, but that can turn into a nightmare if you're not smart about it. Educate yourself on the process before you make any firm commitments. Read on for important information you ought to know prior to getting a loan.
If you are having a hard time paying back your student loans, call your lender and let them know this. There are normally several circumstances that will allow you to qualify for an extension and/or a payment plan. You will have to furnish proof of this financial hardship, so be prepared.
Do not default on a student loan. Defaulting on government loans can result in consequences like garnished wages and tax refunds withheld. Defaulting on private loans can be a disaster for any cosigners you had. Of course, defaulting on any loan risks serious damage to your credit report, which costs you even more later.
Never ignore your student loans because that will not make them go away. If you are having a hard time paying the money back, call and speak to your lender about it. If your loan becomes past due for too long, the lender can have your wages garnished and/or have your tax refunds seized.
Know how much time your grace period is between graduating and when you need to start paying back loans. Many loans, like the Stafford Loan, give you half a year. For a Perkins loan, this period is 9 months. Other student loans' grace periods vary. Understand when your first payments will be due so that you can get on a schedule.
If you want to apply for a student loan and your credit is not very good, you should seek out a federal loan. This is because these loans are not based on your credit score. These loans are also good because they offer more protection for you in the event that you become unable to pay it back right away.
Choose a payment plan that you will be able to pay off. Many student loans offer 10-year payment plans. If this is not ideal for you, look into other possibilities. For instance, you might be able to get a longer repayment term, but you will pay more in interest. You can put some money towards that debt every month. There are some student loans that will be forgiven if you have not got them paid in full within 25 years.
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.
Student loans can be complicated, so it is important to learn as much as you can. What you do now will follow you around for quite some time after you graduate. Smart borrowing is the way to go, and the tips in the above article should be remembered when you go to apply for a student loan.