The cost of a college education is expensive, and most people need student loans to finance the cost for them. There are right ways and wrong ways to use student loans, and we want to help you avoid the biggest mistakes we see people make:
Paying for student loan assistance. There are many companies soliciting this help. However, you should know that the Department of Education offers guidance about all things concerned with student loans, for free.
Choosing the wrong repayment plan. Or not choosing at all. This is what determines your monthly payments loan repayment terms. There are a number of options, but if you do not choose one for yourself, it will automatically be set up as a 10-year standard plan. While this might enable you to repay quickly, your payments could be …show more content…
If you took your loans out prior to 2011, you should consider consolidation. Consolidating opens up opportunities to the aforementioned forgiveness programs and income-driven repayment plans. Know the pros and cons before deciding.
Not setting up an automatic payment plan. Missing a payment can cause havoc on your credit, but setting up bank drafts for payments will save .25% in interest as well.
Not paying extra when possible. Interest is accruing daily, so pay a little extra whenever possible to keep your overall repayment costs as low as possible. Be sure that your student loan servicer applies the extra portion directly to the principal balance.
Not asking for help if needed. Your student loan servicer can help you through rough patches by offering a deferment or forbearance to temporarily stop payments. While not good long-term solutions, they can help in a pinch.
Not considering income-driven repayment. This type of plan uses your income to decide the payment terms. For instance, a single person making less than $1,486 per month would have a payment of zero. However, in this scenario, the government might cover all or some of the interest on your
Paying for student loan assistance. There are many companies soliciting this help. However, you should know that the Department of Education offers guidance about all things concerned with student loans, for free.
Choosing the wrong repayment plan. Or not choosing at all. This is what determines your monthly payments loan repayment terms. There are a number of options, but if you do not choose one for yourself, it will automatically be set up as a 10-year standard plan. While this might enable you to repay quickly, your payments could be …show more content…
If you took your loans out prior to 2011, you should consider consolidation. Consolidating opens up opportunities to the aforementioned forgiveness programs and income-driven repayment plans. Know the pros and cons before deciding.
Not setting up an automatic payment plan. Missing a payment can cause havoc on your credit, but setting up bank drafts for payments will save .25% in interest as well.
Not paying extra when possible. Interest is accruing daily, so pay a little extra whenever possible to keep your overall repayment costs as low as possible. Be sure that your student loan servicer applies the extra portion directly to the principal balance.
Not asking for help if needed. Your student loan servicer can help you through rough patches by offering a deferment or forbearance to temporarily stop payments. While not good long-term solutions, they can help in a pinch.
Not considering income-driven repayment. This type of plan uses your income to decide the payment terms. For instance, a single person making less than $1,486 per month would have a payment of zero. However, in this scenario, the government might cover all or some of the interest on your