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More and more students today are taking out student loans as the cost of education continues to rise. Below are some useful tips and helpful links to make the process of finding and taking out your student loans as easy and economical as possible.
- Be Familiar With Your Loans: Keep track of your lender/s (especially if there is more than one), your loan balances, your repayment statuses and your grace periods. Different loans may have different grace periods. These details may affect your loan repayment, discounts or loan forgiveness.
- Don't Panic: If you can't afford to make payments on your loan, do not panic. There are ways to suspend payments due to unemployment, returning to school or health issues. Options include deferment or forbearance. Deferment postpones payments while interest accrues on only the unsubsidized loans. Forbearance postpones payments, but interest accrues on both subsidized and unsubsidized loans.
- Avoid Default: A loan that has gone unpaid for more than 9 months enters default. Once you default, your total loan balance including interest is due immediately. Tax reimbursements could be seized, you are no longer eligible for federal grants or loans, you will owe hefty collection fees and there will be a life-long mark on your credit report.
- Pay Off the Most Expensive Loans First: If possible, pay off the loan that has the highest rate first. If you have private loans and federal loans, pay off the private loans first because they will most likely have higher interest rates than federal loans. Check out GL's targeted repayment program, which advises students to pay off the highest debt first by putting other loans into a non-payment status.
- Consolidate: Consolidating loans combines multiple loans into one single monthly payment and one interest rate. You can only consolidate once so do your research and make sure you get the best benefits possible. Check with your lender first to make sure consolidation is the best option for your loans.
- Keep In Touch With Your Lender: Remember that your lender is there for advice and support throughout the life of your loan. Always keep your lender updated on current contact information so they can always reach you. If you are receiving unwanted calls or emails from your lender, make sure you address the issue with them directly and come to a resolution.
- Prioritize Your Debt: Organize all documents regarding your debt: balances, interest rates, and monthly payments for each debt you may have. Make sure you take care of the necessities first meaning food, housing, taxes and a car payment (if applicable). If you are having trouble paying off your debt, pay minimum payments where applicable such as credit card bills or personal loans. If you can pay off a smaller debt easily, take advantage of that in order to eliminate a bill all together.
- Use ACH: If possible, take advantage of Automated Clearing House, an automatic setup to deduct monthly payments straight from your bank account. This ensures you will not forget or miss a payment. Paying on time with no late payments could qualify you for future benefits. Some lenders will give you a 0.25% rate discount just for signing up.
- Ask Your Employer: Investigate if your employer will help you pay off your student loan. Employers may be willing to do so, in order to retain capable employees.
- Control Your Spending: Keep all spending under control. Remember you have priorities and responsibilities in paying off your debt. There are consequences in not paying bills and it could cost you more in the long run.
- Compare lenders to consider all of your options. This includes comparing rates and the terms of the loan. Take note of application fees, origination fees, default fees and tiered pricing.
- Rely on trusted sources. Speak with financial aid advisors for advice and support. Focus on lenders that have great customer service and are looking out for the best interest of the student's financial situation.
- Do not borrow more money than is necessary. Remember you are not required to borrow the maximum or the amount you are awarded if you do not need it. If you borrow more money than you need, this will only accrue more costs later.
- Recognize your options. See if you qualify for any financial aid by filling out a FAFSA (Free Application for Federal Student Aid). Exhaust the use of federal loans available to you before pursuing a private student loan, which tend to be more difficult to obtain and more expensive with high variable interest rates.
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