to manage student loans.
1) Be practical and know the details about all your borrowings.
* You must be aware of your total debts, and for this you will
have to find out what all loans you have taken up and details
about each student loan help in terms of the lender and the
payments. You should also know about the total amount of debts
that you have to pay.
* The paperwork and the records must be up to date and secured
properly. The information on all the student
loan help that have been taken up by you is available on
the web site www.nslds.com.
2) Handling repayment:
* Making timely payments as per the repayment plan will take
your credit ratings in the positive direction.
* Timely payments help you to save on your student loans, as
making delayed payments will invite additional interest.
* Defaulting gets you nothing more than bad credit ratings and
penalties from the Federal government.
3) Payment affordability:
* When shopping for student loan
help, make the extra effort to get the best benefits. Some
lenders have the provision of borrower benefit programs under
which you can enjoy a lower rate of interest and sometimes reduction
in the principal loan amount is also possible. Before taking
the loan you must equate it with your current situation.
* Be wise in your choice of the repayment plan, you can choose
one of the following as per your convenience:
1) Standard repayment option: under this you will have fixed
monthly payments and the term can be extended up to 30 years.
This makes a great choice if the overall interest cost is your
first prerogative because this plan has the lowest interest
2) Graduated payments: under this repayment option the monthly
payments for the initial period of two to three years are low
and gradually increase as you move on with the term.
3) Income sensitive repayment plan: under this the monthly payments
for your student loans are adjusted on the basis of your annual
When choosing a repayment plan, do ensure that the monthly payments
are never less than the amount of interest for each month. If
it is so, your outstanding balance will keep on rising and you
will have to pay much more than the actual amount of the student
4) Making repayment easier with consolidation:
* Consolidation involves taking up a new loan for an amount
which is equal to the total of all
the outstanding debts and paying off all the other loans with
this amount so that finally you are responsible only for this
new loan. Consolidation loans come on a fixed rate of interest
and are beneficial because they replace multiple monthly payments
by a single monthly payment. During consolidation the student
can take the new loan for a longer term to bring down his monthly
payments, and in some cases the reduction in the monthly payments
can be even up to 50 percent. Consolidating during the six month
grace period has the added advantage of locking in the lowest
interest rates during the grace period.
* Consolidation gives you the advantage of a single monthly
payment, but if you do not plan to consolidate and all your
loans are from a single lender you can ask him to give you a
single monthly bill which can make it convenient for you to
handle all your student loans.
* Allowing the lender to deduct the monthly payments from the
students saving or checking account can be done by signing up
for an Automatic debit option. An automatic debit option will
not only ensure timely monthly payments and convenience for
the student, but also some lenders give you a discount on the
interest rate when you sign up for this option.
* The consolidation of your student loans takes place under
your social security number. Whenever you consolidate your student
loans, try not to consolidate the Federal student loans along
with the private student loans for the reason that you will
lose out on the benefits which are applicable only for Federal
* Consolidation is beneficial only if the student has more than
$10,000.00 as the outstanding balance of his total Federal loans.
5) Understanding what you are allowed:
* There are some benefits which are common for all Federal government
guaranteed student loans, and don*t let the lender fool you
that he is giving you some unique benefits. Here are some of
the common benefits:
1. Fixed rate of interest
2. There is no application or processing fees
3. Credit checks are not required for student loans
4. There is no prepayment penalties associated with these loans
5. The interest rates are half a percent lower when consolidation
is carried out during school or within the grace period.
* The other privileges that you can enjoy on your Federal student
1. Deferment of monthly payments
2. Forbearance of loan amount.
All the benefits available for Federal student loans do not
change with your choice of the lender.
6) Rules you must observe to maintain the benefits:
* Consolidation must be carried out only after you have evaluated
how consolidation will affect the benefits that you currently
enjoy on your student loan help.
Sometimes consolidation may mean losing some of the benefits.
* Some benefits are related to timely payments, and making even
a single late payment can take away all the benefits for the
entire term of the loan.
* Some benefits are associated with the automatic debit option,
and if you withdraw this option you will lose all the benefits.
Lastly, if you follow all these rules you surely would not face
any problems with your student loans.
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