Being poor is not an excuse for someone to skip school because there are lots of solutions to this problem. Student loans is one of them; almost 60% of American students borrow money annually to help them cover the cost of education.
People turn to loans despite interests because of the strong belief that attaining higher education is an investment and a stepping stone to a brighter future. Student loans do not only pertain to tuition fees but also to books, room and board, computer, transportation expenses and other college related expenses.
There are two kinds of student loans: federal student loans and private student loans. Federal student loans are usually granted to parents and has lesser interest rates but should be paid immediately even while the student is still studying. On the other hand, private student loans have much higher interest rates and should only be considered as last resort. Despite having higher interest rates, a private student loan can be granted to either the student or the parents and will only be paid after the student graduates.
It is your choice along with your parents when you are going to start paying student loans. You can start after graduation, during your break from school or even while you are still studying. Paying loans is simple but there are certain points to take note of, such as penalties, extra interest costs or the effect your loans have on your credit scores. Here are some of the information you need to know:
Know your Loans
You should have an idea about the vital information of your loan, which includes your lender, the interest, balance, and payment history. If you are not sure about these details, you can check the status of your federal loan online. You will see your loans listed there and the information that you need. If you do not see some of your loans, chances are your loan is made in a private lending company. You should have a record or a file of your payment history and other paperwork that was secured when you signed the contract.
Know your Grace Period
A grace period is the time given to you when you should start paying student loans. Different kind of loans have different grace periods, even federal loans. Some may give you around 6 months, some will give you 9 while others depends on when the loan was granted and issued to you. Private loans have different grace periods as well so it is important that your contract is clear with your lender.
Keep in Touch with your Lender
If you recently changed your contact number or transferred residency, your lender should be updated and should know these things. Always check your email and your mail box for letters or updates regarding our loans. Ignoring things like this will be a high price you have to pay for later on. Keep in mind that lenders are not enemies. They can help you look for better payment schemes or solutions to your other problems involving your loans.
Pay when you are able
If you have spare cash with you then it is good to pay more than what you are required to monthly. Decreasing your balance faster will also decrease the interest of your loan. But before doing this, make sure that your lender knows you are making advance payments to your balance because if they are not informed, they will most likely assume that it is a payment for your future bill.
Pay the Most Expensive First
If you would like to pay one or more of your loans ahead of schedule, it is best to choose to pay the loan with a higher balance and interest first. For example, pay private loans first due to their higher interest rate and less flexible payment options compared to federal loans.
Some federal loans are forgiven if you work in a certain field or for certain employers, like health care workers, teachers, Americorps, etc. Try to find out if you can be qualified for loan forgiveness.