College comes with many lessons and one of the most important one is about finances. College can be a costly venture and student loans are often used to pay for all of the expenses that college comes with. So learning to be an educated borrower is the best way to approach student loans. Here are some things to keep in mind.
Keep in mind that there’s a grace period to follow before it’s time to pay a loan back. This is generally a pre-determined amount of time once you graduate that the payments will have to begin. Keep this information handy and avoid penalties from forgetting your loans.
When it comes to student loans, make sure you only borrow what you need. Consider the amount you need by taking a look at your total expenses. Factor in items like the cost of living, the cost of college, your financial aid awards, your family’s contributions, etc. You’re not required to accept a loan’s entire amount.
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.
If you are moving or your number has changed, make sure that you give all of your information to the lender. Interest begins to accrue on your loan for every day that your payment is late. This is something that may happen if you are not receiving calls or statements each month.
Implement a two-step system to repay the student loans. First, make sure that you meet the minimum monthly payments of each individual loan. Then, those with the greatest interest should have any excess funds funneled towards them. This will keep to a minimum the total sum of money you utilize over the long run.
How long is your grace period between graduation and having to start paying back your loan? Stafford loans usually have one half year before the payments have to be made. Others, like the Perkins Loan, allot you nine months. Other types can vary. Make sure that you are positive about when you will need to start paying and be on time.
Think about what payment option works for you. Many loans offer a decade-long payment term. There are other choices available if this is not preferable for you. For example, you may be able to take longer to pay; however, your interest will be higher. After you begin to make money, you might be able to use a certain percentage of that income to help pay down the student loan. The balances on some student loans have an expiration date at 25 years.
The above advice is just the beginning of the things you need to know about student loans. It pays to be an educated borrower and to understand what it means to sign your name on those papers. So keep what you have learned above in mind and always make sure you understand what you are signing up for.