Student Loans- Paying as go, paying off, how to handle

*sigh* Student loans. Nobody wants to deal with them, but without them, some would not be able to further their education. We have all heard at least one story that involved a ridiculous amount of student loan debt that would be enough to scare some away from getting a student loan in the first place. It is not at all bad to fear student loan debt, because, after all, who wants a heap of debt to pay off? However, fears about student loans can be minimized by knowing how to responsibly handle them from the beginning, and the options that are available in the case that a payment cannot be made.

Borrowing

First and foremost, when applying for or accepting loan amounts, only borrow what is needed! Be sure to know the amount of money you need to borrow. Also, keep in mind what your student loans are for: educational expenses. In the case that there is money left over, the student will be refunded the unused amount, in the form of check or direct deposit.

Sadly, there are cases of students using extra, unused loan money to fund trips, shopping sprees, and other expenditures unrelated to education. Spend your money how you’d like, because it is yours once it is disbursed, but remember that all loan amounts MUST be paid back, most them with interest, so use it wisely.

Grace Periods

Most federal student loans are not required to be repaid immediately upon graduation, dropping to half-time status, or withdrawing from school completely, which is very accommodating. The grace period gives individuals a chance to get their finances in order and choose a repayment plan. Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans have a six-month grace period before payments are due. Although federal, PLUS loans do not have a grace period. Grace periods for private student loans, like those from Sallie Mae, may vary and possibly accrue interest during that time. Before accepting a loan, be sure that you have an understanding of their grace period policy.

Repaying Loans

You can’t make a payment. You aren’t the first person in this position, and you most certainly won’t be the last. Working with your loan provider is a good start for anyone who may find themselves in this position. Ignoring the collection calls is not the way to go! Three ways to help keep track of your payments are:

  • Change Your Payment Due Date. Communication with your loan servicer is key. Let them know of any changes you may have in finances as soon as possible to avoid a past due payment.
  • Change Your Repayment Plan. When beginning to pay back Federal Student loans, you may choose or be assigned to a specific repayment plan, but you can change your plan at any time for free. Review the different repayment plans here along with which loans are eligible, monthly payments, time frames, and more. Take advantage of the Repayment Estimator to get an early look at eligible plans and overall monthly payments.
  • Consolidate Your Loans. For those with multiple student loans, loan consolidation could help simplify the repayment process since it allows you to combine all federal student loans into one, for one monthly payment. Learn more about Direct Consolidation loans here.

 

Taking out student loans doesn’t mean that you’ll be trapped by them for the rest of your life. Make a budget, choose a repayment plan that is best for you, and always communicate if you’re unable to make a bill. Things happen, but things will also be just fine!

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