7 Things You Need to Know About Your Student Loans

71% percent of college graduates have student loan debt. And it’s more than likely you didn’t read the fine print when you signed up for your loan – meaning you could end up paying a lot more money than you need to. That’s why we’ve broken down a few common loan terms for you so once you graduate, you’re not out at sea.

  • Unsubsidized vs. Subsidized Loans: Depending on your financial aid package, you might have qualified for Stafford Loans. These come in two types: subsidized and unsubsidized. Every loan comes with interest. But if yours is subsidized, the government pays the interest for you as long as you’re still in college. In other words, your loan isn’t accruing interest so you won’t owe any additional money. But on an unsubsidized loan, the interest keeps adding up even if you’re still in school.
  • Grace Period: A grace period is the period after you graduate when you don’t have to start paying off your loans – usually about 6 months. But just because you don’t have to pay doesn’t mean you shouldn’t. Your interest is still accruing, adding more money you’ll have to pay off later.
  • Deferment: Many loan providers offer deferment, where you can temporarily stop or delay your loan repayment. For example, if you’re returning to school or are going through a medical emergency, you can apply for deferment. But just because you apply for deferment doesn’t necessarily mean your provider will grant it to you.
  • Income-Based Repayment:  If you’re having trouble meeting the standard monthly payments required by your loan company, it might be time see if they offer an income-based repayment plan. A plan like this determines your monthly payments by taking your income into account.
  • Graduated Repayment:  Another repayment plan you should consider is one where the payments start off low and gradually increase over time. This is ideal if you’ve managed to snag an entry-level job after graduation that offers significant opportunity for advancement.
  • Consolidation: If you took out student loans, you probably have them from multiple lenders. So when you pay yours each month you make multiple transactions. But if you consolidate your loans, you might qualify for a lower interest rate based on your credit score. That way, you’d only have to make a single payment each month
  • Loan Forgiveness: The government offers programs where you can actually have part of what you owe forgiven. This means that your debt is being cancelled – but this is restricted to certain professions like teaching or social work.

Remember, student loan debt never goes away. If you get married your student loans also become your spouse’s problem. And since you can’t get rid of student loans by declaring bankruptcy, one of the only ways to avoid debt is death. Isn’t that depressing? That’s why it’s so important to understand your repayment options sooner rather than later. Don’t ever wait until you starting missing payments to ask for help.

Liked this? Check out 6 Job Search Tips You Might Not Have Considered!

Written by Roselyn Sebastian

Photo Credit: MoneyBlogNewz via Compfight cc

71% percent of college graduates have student loan debt. And it’s more than likely you didn’t read the fine print when you signed up for your loan – meaning you could end up paying a lot more money than you need to. That’s why we’ve broken down a few common loan terms for you so once you graduate, you’re not out at sea.

  • Unsubsidized vs. Subsidized Loans: Depending on your financial aid package, you might have qualified for Stafford Loans. These come in two types: subsidized and unsubsidized. Every loan comes with interest. But if yours is subsidized, the government pays the interest for you as long as you’re still in college. In other words, your loan isn’t accruing interest so you won’t owe any additional money. But on an unsubsidized loan, the interest keeps adding up even if you’re still in school.
  • Grace Period: A grace period is the period after you graduate when you don’t have to start paying off your loans – usually about 6 months. But just because you don’t have to pay doesn’t mean you shouldn’t. Your interest is still accruing, adding more money you’ll have to pay off later.
  • Deferment: Many loan providers offer deferment, where you can temporarily stop or delay your loan repayment. For example, if you’re returning to school or are going through a medical emergency, you can apply for deferment. But just because you apply for deferment doesn’t necessarily mean your provider will grant it to you.
  • Income-Based Repayment:  If you’re having trouble meeting the standard monthly payments required by your loan company, it might be time see if they offer an income-based repayment plan. A plan like this determines your monthly payments by taking your income into account.
  • Graduated Repayment:  Another repayment plan you should consider is one where the payments start off low and gradually increase over time. This is ideal if you’ve managed to snag an entry-level job after graduation that offers significant opportunity for advancement.
  • Consolidation: If you took out student loans, you probably have them from multiple lenders. So when you pay yours each month you make multiple transactions. But if you consolidate your loans, you might qualify for a lower interest rate based on your credit score. That way, you’d only have to make a single payment each month
  • Loan Forgiveness: The government offers programs where you can actually have part of what you owe forgiven. This means that your debt is being cancelled – but this is restricted to certain professions like teaching or social work.

Remember, student loan debt never goes away. If you get married your student loans also become your spouse’s problem. And since you can’t get rid of student loans by declaring bankruptcy, one of the only ways to avoid debt is death. Isn’t that depressing? That’s why it’s so important to understand your repayment options sooner rather than later. Don’t ever wait until you starting missing payments to ask for help.

Liked this? Check out 6 Job Search Tips You Might Not Have Considered!

Written by Roselyn Sebastian

Photo Credit: MoneyBlogNewz via Compfight cc

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