It’s always best to know your options when addressing any debt. Student loans can especially be a long and complicated process that might seem overwhelming and even put your good credit at risk if you don’t pay on time.
There’s a lot at stake, so you should know how to manage student loan debt. One thing you need to know before acquiring a student loan is to first look for federal student loans.
Private loans aren’t backed by the federal government and you can pay more interest – plus, they’re risky to your ongoing credit. When you’re ready, fill out the free application for Federal Student Aid.
If you decide to take out a federal student aid loan, you’ll be paying back the loan with interest, but the interest rate will be lower and the payment options will be more flexible. The amount of the loan you can secure depends on whether you are an undergraduate or graduate student.
Parents of undergraduate students can also apply for a federal student loan for costs not covered in other types of financial aid. A credit check is usually required for a parent (PLUS) loan.
After you secure a loan, make sure you keep in touch with your loan servicer (bank or government). Managing your student loan properly is the best way to stay out of financial difficulties and know your options before problems occur.
Make sure you update loan servicers with new information about your whereabouts such as new address, phone number and email address. That will also ensure that you’ll be updated about the servicer’s important communications to you.
Contact your lender immediately if you’re having trouble making payments on time. If you’ve secured a federal loan, you might be able to temporarily suspend or reduce your payments.
Ignoring the late payment consequences might include ruining your credit score, increasing the amount you must pay or garnishment of any wages you might earn. Finding yourself drowning in debt from student loans and other life circumstances can be devastating.
There is a program called “Public Service Loan Forgiveness” which may forgive a debt after 10 years of repayment. The qualifications include that you currently work for the government or a nonprofit agency or certain other public service jobs.
You may also qualify if you’re a teacher, medical personnel or are serving in the military. The good news is that a four-year college graduate is much better able to find employment and earn a higher salary than those who only graduate high school.
Getting an education can be very expensive and grants and scholarships have been reduced and have failed to rise as fast as tuitions. Avoid misunderstandings of student loan repayments by keeping in touch with your lender and making sure you understand your options before signing on the dotted line.