The very thought of a student loan makes most of us shudder. The complexity of it all, the stress of making payments on time, the debt that we fear will follow us around forever; this is what we think of when we think about student loans. It’s important to have at least a general understanding of loans to help minimize many of these fears.
Here are a few things that you may not have known about student loans:
1. Types of Loans
There are many different kinds of loans out there. Before you can choose the best loan for yourself, you have to get familiar with all of the different types of loans that are available to you. You can choose between getting a federal loan (if you are eligible) or applying for a loan from a private lender. Federal loans can be in the form of a Stafford loan which comes directly from the federal government, or it can be in the form of a Perkins loan which are funded by the federal government but are given out through the universities themselves. The breakdown continues even further from there. Check out this article to learn more about the different types of student loans to figure our which one is right for you.
2. Grace Period
One of the perks of a federal student loan is the six month grace period (be careful, this is not applicable on ALL loans, so be sure to do your research). After graduation, you are given six months before being required to many any payments on your federal loans. This is great because it takes some of the pressure off of you for a few months after your graduation and allows you time to find steady income. Although you are given this option, you can still make payments during this period if you would like to get a jump on paying off your loan. Contact your lender to find out if your loan offers you a grace period and check out this article for some more information.
3. Discounts on Interest Rates
Signing up for automatic payments can save you money. Many lenders offer a small discount on your interest rates if you make your payments through electronic debit. Not only is this beneficial financially speaking, but it also ensures that you will not forget to make your monthly payments as your bank automatically makes the payment for you each month. Consolidating your loans into one payment may also slightly lower your interest rates, but may actually take longer to pay off. Read about consolidating and more ways to save on your loans here.
When it comes to student loans, your biggest tool is knowledge. When you become familiar with all of the possible student loans out there and what each one offers, you will feel more comfortable with the loan that you choose. Loans are not fun, but they are available as an opportunity to invest in education and your future. Just make sure you know what you can handle and in the long run, it could actually build up your credit!