Everyone make mistakes as a college student. It just a part of life and a learning experience. But making mistakes about your student loans can quickly become a nightmare if you don’t borrow wisely. So heed the advice below and educate yourself on student loans and how to avoid costly mistakes.
Be sure you understand the fine print of your student loans. You need to stay on top of your balances, your lenders and the repayment status in which you find yourself at any given time. These are three very important factors. This information is needed for proper budgeting.
Know your grace periods so you don’t miss your first student loan payments after graduating college. Stafford loans typically give you six months before starting payments, but Perkins loans might go nine. Private loans are going to have repayment grace periods of their own choosing, so read the fine print for each particular loan.
Maintain contact with your lender. Always let them know anytime your personal information changes, because this happens quite a bit when you’re in college. In addition, be sure to open and read all correspondence that you receive from your lender right away, whether it arrives electronically or via snail mail. Take whatever actions are necessary as soon as you can. Overlooking things can end up being very expensive.
If you have taken a student loan out and you are moving, be sure to let your lender know. It is important for your lender to be able to contact you at all times. They will not be too happy if they have to go on a wild goose chase to find you.
Don’t let setbacks throw you into a tizzy. Unemployment and health emergencies can happen at any time. You may have the option of deferring your loan for a while. Just remember that interest will continue to build in many of these options, so try to at least make payments on the interest to prevent your balance from growing.
Be careful when consolidating loans together. The total interest rate might not warrant the simplicity of one payment. Also, never consolidate public student loans into a private loan. You will lose very generous repayment and emergency options afforded to you by law and be at the mercy of the private contract.
Look to pay off loans based on their scheduled interest rate. The loan with the individual highest rate needs paid down fastest and first. Paying a little extra each month can save you thousands of dollars in the long run. The is no penalty for early repayment.
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.
Educating yourself about student loans can be some of the most valuable learning that you ever do. Knowing all about student loans and what they mean for your future is vital. So keep the tips from above in mind and never be afraid to ask questions if you don’t understand what the terms an conditions mean.