These student loan tips will help you in managing your student loan debt. Also, these tips are for everyone irrespective of the fact you have just graduated, or on a break from school, or just graduated, or having trouble finding job, or have already started repaying your student loans. Also, these student loan tips will help you in avoiding fees, additional interest cost, fall in credit rating and increasing of monthly payments. Following are the student loan tips to help you manage your student loan debt.
Top 10 Student Loan Tips Are As Follow
The first among the Top 10 student loan tips is to keep yourself updated with your current loan outstanding, interest rate, repayment status and any other changes done by lender. This is important because these things impact your options for loan repayment and forgiveness. In case of any doubt, just ask your lender for details or visit www.nslds.ed.gov for federal loans details. Please note, it contains only federal loans and private loans are not listed on the website. For private loans, one way is to check you recent loan statement or the original paperwork that you signed.
Another key thing to know is your grace period i.e. time you have after leaving school before you need to make your first payment. One should remember different loans have different grace periods and it’s crucial to know the grace period on your loan. For Ex, federal Perkins loans have nine months grace period while a federal Stafford loan is six months.
When your federal loans come due, your loan payments will automatically be based on a standard 10-year repayment plan. If the standard payment is going to be hard for you to cover, there are other options, and you can change plans down the line if you want or need to. Extending your repayment period beyond 10 years can lower your monthly payments, but you’ll end up paying more interest – often a lot more – over the life of the loan. Some important options for student loan borrowers are income driven repayment plans such as Income-Based Repayment and Pay As You Earn which cap your monthly payments at a reasonable percentage of your income each year, and forgive any debt remaining after no more than 25 years (depending on the plan) of affordable payments. Forgiveness may be available after just 10 years of these payments for borrowers in the public and nonprofit sectors. Private loans are not eligible for IBR or the other federal loan payment plans, deferments, forbearances, or forgiveness programs. However, the lender may offer some type of forbearance, typically for a fee, or you may be able to make interest-only payments for some period of time.
Communicate with Lender
Another among the most important student loan tips is to keep in regular touch with your lender as they will send across crucial information on regular intervals. One should keep his/her contact information (email, phone and address) up to date with the lender so that you can receive all the information from lender. Also, organize all the documents or emails you receive from lender and do read it completely. In addition, if one is getting unwanted calls from lender/collection agency there is no need to worry and one should talk with them as lenders/agencies have to follow certain rules. Also, they are supposed to work with borrowers to resolve problems. Ignoring communication from the lenders can lead to severe, long-term consequences
Trouble making payment:
There is no need to panic, if someone is having trouble in making payments towards its student loan due to certain reason such as unemployment, health problems, or other unexpected financial challenges. One should remember that there are certain options for managing federal student loans, which are legitimate ways to delay federal loan payments, such as deferments and forbearance. For example, an unemployment deferment might be the right choice for you if you’re having trouble finding work right now. However, one should remember interest accrues on all types of loans during forbearance and on some types of loans during deferment which will increase overall debt and one should ask lender about making interest-only payments if one can afford it. In addition, one can opt for Income-Based Repayment if one expect income to be lower than one hoped for more than a few months. Please note, under IBR required payment can be as little as $0 when income is very low.
There are various programs that will forgive all or some of your federal student loans if you work in certain fields or for certain types of employers. Public service loan forgiveness is a federal program that forgives any student debt remaining after 10 years of qualifying payments for people in government, nonprofit, and other public service jobs. There other federal loan forgiveness options available for teachers, nurses, AmeriCorps and PeaceCorps volunteers, and other professions, as well as some state, school, and private programs.
Defaulting on loan
One should not default on student loan and ignore it completely, since it can have serious consequences with lifetime consequences as non-payment can lead to deliquency and default. For federal loans, default happens after nine months of non-payment while for private loans it can happen more quickly. On federal loan default, one’s total loan balance becomes due, credit score is ruined and one becomes ineligible for various federal student loan reliefs offered by government. Also, the total amount you owe increases dramatically as well as government can garnish wages and seize your tax refunds in case of default on a federal loan. In case of private loans, credit score is ruin as well as it can put anyone who co-signed for your loan at risk as well. The best way to avoid is to talk to lender right away if you’re in danger of default as well as consider relief option offered for federal loans.
A consolidate loan combines multiple loans into one loan for a single monthly payment and one fixed interest rate. It seems very appealing but it has its own pros and cons. To consolidate private student loans, one needs to shop around carefully so that one can get the lowest interest rate student loan on an offer. Also, one should never consolidate federal loans into a private student loan as it results in loss repayment options and borrower benefits which come with federal loans.
This is the best thing to do, try to squeeze your expenses and pay more every month than the regular monthly installment. It will result in early repayment of loan and lower interest cost over the entire loan life. To pay down your student loan more quickly, one require to make a written request to lender specifying that the extra amount be applied to your loan balance, and continue making payments each month. Otherwise, prepayment will automatically be credited as future payments and one may not be billed for the next month.
Pay Off the Most Expensive Loans First
It may be the case you got additional money as well as multiple loans so what should one do. The basic rule is to pay off the one with the highest interest rate. Also, if one has private loans as well as federal loans, start with private loans, since they almost always have higher interest rates, lack flexible in repayment options and other protections of federal loans.
Hope above student loan tips helps you in managing your student loan debt and rewards you with a sound financial health over your entire life.