Student Loans – Advice
Student loans are a form of financial aid that is extended by the government to facilitate higher education. Unlike other forms of educational financial aid e.g grants and scholarships, these loans must be repaid. Despite this fact, student loans remain a superb choice when it comes to securing higher education. See loan options.
What are some types of student loans available?
There are three categories that one can opt for. These include:
*Federal Student Loan- This is sent directly to the student’s bank account. It has a grace period and loan forgiveness whenever possible.
*Federal Student Loan for parents- these are provided to the student’s parents. They have higher limits and no grace period.
*Private Student Loan- these ones have high limits, prompt interest charges and are payable after one graduates.
How is the money disbursed to you?
Funds are distributed from the treasury department, to the department of education, then from there to your college which then wires the money to you. Almost all colleges that are duly registered and approved by the department of education participate in offering these loans to their students.
What about the private student’s loans?
There are two channels for wiring this money to the applicant. These are school-channel loans and direct-to-the-consumer private loans.
School-channel Loans-These channel normally attracts low interest rates though it might take a long time due to the bureaucracies involved.
Direct-to-the-consumer Private Loans- as for these loans, the lender directly wires the money into the students account. Private students loans channelled through this route normally attract high interest rates.
How to Prepare For Student Loan Repayment
The following 7 tips will help you prepare for your loan repayment during the grace period.
Tip #1 Learn the specific details about your loan
One important thing to do during your grace period is to ensure that you track down every important detail about your loan. Enquire about the duration of the grace period, monthly payments and the interest rates. After establishing this information, you’ll be at a position to come up with a good repayment program.
Tip #2 Communicate with your lender
Even though your loan is not yet due for repayment, communicate with your lender in advance. Update all your contact information so as to ensure that you receive all information about your loan from the lender on time.
Tip #3 Budget
If you’re earning, restructure your budget early and start saving towards your student loan. It’ll make the going easier for you once the loan matures as you’ll have already accumulated a substantial amount to offset it. This will also help keep your lifestyle on check and cultivate a saving culture in you.
Tip #4 Enquire about several student repayment options
Normally, the standard student loan repayment duration is 10 years but this is not the only option available for you. You can extend your loan repayment period and even be eligible for federal loan programs to help your relieve some of your financial burden. Enquire more about this tip in order to get more details.
Tip #5 If possible start repaying your interest as early as possible
Even though your loan repayment date has not yet arrived, you can still make arrangements to start repaying your interest rate before the due date. The interest charges continue accruing even during the grace period and hence trying to offset them in advance will help reduce the repayment burden.
Tip #6 Make good use of the financial aid officers
The financial aid officer is always there to help you out in case of any difficulties. Feel free to contact them at any time for any relevant questions about your student loan.
Tip #7 do not panic
Normally, before the repayment date finally arrives, most beneficiaries tend to become anxious and restless. However, there’s no need for panicking. Try and utilize the available resources wisely and figure out how to repay this loan without overly straining yourself.
Student Loans and Advice For Parents
To most parents, the cost of securing higher education for their kids is seen as a long-term blow to their financial stability. For parents having more than child in campus, the burden can seem insurmountable and formidable. Let us now learn a few tips on how to offset you off this hook.
Avoid Selling Important Assets for College Fees
If possible, try as much as you can to ensure that all your strategic assets remain intact even after your son or daughter joins college. Instead of rushing to dispose off your assets, explore other alternatives such as the Parent PLUS loans and the Stafford loans. This will help you protect your long-term financial stability.
Apply For Financial Aid on Time
You’ve probably heard the old famous quote-”The early bird catches the worm.” As a parent, you have to play a steering role in ensuring that your son or daughter applies for all the available financial aid on the right time. Most of these loans and grants are offered on a first come first serve basis and so you must be sure to be among the first ones to apply.
Bundle your children in college
This one applies to parents with more than one kid joining college within a span of say two years. It is possible to save a lot by having them attend college at the same time. Multiple tuition bills are significantly cheaper than paying individual bills separately.
Involve you kids
Involving your kids in contributing towards their college degree is also a superb idea. Your kids are the sole beneficiaries of their education. So, before you even start thinking about borrowing, let them borrow first.
In conclusion, student loans are very ideal for anyone seeking to secure higher education. However, as we’ve seen throughout the entire student loan advice, one must be very cautious when it comes to repaying them as failure to do so may endanger your financial stability.