College expenses continue to soar and students are increasingly turning to student loans to finance their education. But the mistakes you make as a young college student can affect your later life so always make sure you understand the terms you are agreeing to. Keep reading to learn other ways to avoid costly student loan mistakes.
Stay in touch with the lender. Keep them updated on your personal information. Be certain that you immediately review anything you get from your lender, be it an electronic notice or paper mail. Take any and all actions needed as soon as possible. If you miss something, it could cost you more.
Don’t panic if you can’t make a payment due to job loss or another unfortunate event. A lot of times, if you can provide proof of financial hardship, lenders will let you to delay your payments. However, this may negatively affect your interest rate.
Don’t get too stressed out if you have trouble when you’re repaying your loans. Job losses or unanticipated expenses are sure to crop up at least once. Realize that there are ways to postpone making payments to the loan, or other ways that can help lower the payments in the short term. Just remember that interest will continue to build in many of these options, so try to at least make payments on the interest to prevent your balance from growing.
Pay your loan off in two steps. First, be sure to pay the monthly amount due on each loan you have taken out. Second, if you have any extra money, use it to make extra payments on the loan that bears the higher interest rate rather than the one that bears the highest balance. That way, you will end up spending a lesser amount overall.
To ensure that your student loan funds come to the correct account, make sure that you fill out all paperwork thoroughly and completely, giving all of your identifying information. That way the funds go to your account instead of ending up lost in administrative confusion. This can mean the difference between starting a semester on time and having to miss half a year.
Be careful about accepting private, alternative student loans. It is easy to rack up a lot of debt with these because they operate pretty much like credit cards. Starting rates may be very low; however, they are not fixed. You may end up paying high interest charges without warning. Additionally, these loans do not include any borrower protections.
If you are in a position to do so, sign up for automated student loan payments. Certain lenders offer a small discount for payments made the same time each month from your checking or saving account. This option is recommended only if you have a steady, stable income. Otherwise, you run the risk of incurring hefty overdraft fees.
Be realistic about the cost of your college education. Remember that there is more to it than just tuition and books. You will need to plan for housing, food, health care, transportation, clothing and all of your other daily expenses. Before you apply for student loans prepare a complete and thorough budget. In this way, you will know how much money you need.
To make sure that you do not lose access to your student loan, review all of the terms before signing the paperwork. If you do not register for enough credit hours each semester or do not maintain the correct grade point average, your loans can be at risk. Know the fine print!
Make sure that you understand the serious implications with taking a student loan. This means that you should not miss too many payments, as it could lead to delinquency and default. This can greatly impact your credit score and could prevent you from getting more loans that you need in the future.
To ensure that your student loan funds last as long as possible, start a savings fund while you are still in high school. The more of your college costs that you can defray from your own funds, the less you have to borrow. This means you have less interest and other costs to pay over time.
Knowing all of the pitfalls of student loans is the best way to avoid them. Don’t be afraid to ask a what all of the terms and conditions are and how they will affect your finances in the future. So keep the advice from above in mind and always borrow wisely.