You need to know about private loans. Student loans have become so ubiquitous, that it is hard to find any college or graduate school student who hasn’t incurred at least one. However, those who lack sufficient understanding of the risks involved in such borrowing may end up in real trouble. Keep reading in order to become an educated prospective borrower.
Stay in communication with all lenders. Let them know if your number, email or address changes, all of which occur frequently during college years. Do not neglect any piece of correspondence your lender sends to you, whether it comes through the mail or electronically. Make sure that you take all actions quickly. It can be quite costly if you miss anything.
If you can’t make a payment on your loans because of unforeseen circumstances, don’t worry. When hardship hits, many lenders will take this into consideration and give you some leeway. Just keep in mind that doing this might cause the lender to raise the interest rate on your loan.
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 into PLUS loans for your graduate work. They have an interest rate that is not more than 8.5 percent. This is a bit higher than Perkins and Stafford loan, but less than privatized loans. This means that this is a suitable choice for students who are a bit older and better established.
Consider a private loan if financial aid won’t cover the costs of school. Never simply take the first offer. Before agreeing to any loan, it is important that you search around for a deal that works best for you.
Make sure you keep track of your loans. You should know who the lender is, what the balance is, and what its repayment options are. If you are missing this information, you can contact your lender or check the NSLDL website. If you have private loans that lack records, contact your school.
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.
Do not default on a student loan. Defaulting on government loans can result in consequences like garnished wages and tax refunds withheld. Defaulting on private loans can be a disaster for any cosigners you had. Of course, defaulting on any loan risks serious damage to your credit report, which costs you even more later.
There can be little debate about the fact that student loans are necessary for countless folks interested in pursuing advanced education. At the same time, far too many people fail to fully grasp how the process works before they incur very significant amounts of debt. By using the above guidance, anyone can become better aware of their available options.