As you approach your last year of high school, you may notice offers for loans arrive in the mail. You might see it as a blessing to have so many options. But here are some things that you need to consider before you sign up for a future of debt.
Remember private financing. Though federal loans are common, competition in the market does exist. Private loans are not in as much demand, so there are funds available. Look around for these kinds of loans, and you may be able to cover part of your schooling.
Do not panic if an emergency makes paying your loans temporarily difficult. You will most likely run into an unexpected problem such as unemployment or hospital bills. Make sure you are aware of the specific terms that apply to such circumstances, such as deferments or forbearance, which are part of most loan programs. Just remember that interest is always growing, so making interest-only payments will at least keep your balance from rising higher.
If you are considering paying off a student loan early, start with the loans with high interest rates. If you get your payments made on the loans that have the lowest or the highest, it can cost you extra in the end.
Pick a payment plan that suits your particular needs. Most student loans allow for repayment over ten years. If this isn’t going to help you out, you may be able to choose other options. Examples include lengthening the time it takes to repay the loan, but having a higher interest rate. You may negotiate to pay just a set percentage of the money you begin to earn. The balances on student loans usually are forgiven once 25 years have elapsed.
Your principal will shrink faster if you are paying the highest interest rate loans first. A lower principal means you will pay less interest on it. Look at the large ones and see how quickly you can pay them off. Once a large loan has been paid off, transfer the payments to your next large one. By making sure you make a minimum payment on your loans, you’ll be able to slowly get rid of the debt you owe to the student loan company.
To get more from student loan money, try taking as many credits as you can. While 9 to 12 hours each semester is full time, you may be able to get 15 to 18 which can help you to graduate faster. When you handle your credit hours this way, you’ll be able to lessen the amount of student loans needed.
Going into default on your loans is not a wise idea. Unfortunately if you do this, the federal government will use all means necessary to recover this debt. For instance, it could freeze your bank account. They can also claim up to fifteen percent of your income that is disposable. This can put you in a position that’s worse than the one you were in to begin with.
College is a time filled with lots of decisions, not the least of which is how much debt you take on. If you choose to borrow more than you actually need and getting loans at higher interest rates could create some pretty big issues. So, it’s important to remember these tips when you go to college.