Student Loans

STUDENT LOANS: THINGS TO REMEMBER

May 31st, 2008 | by vrao |

You must be aware of the facts that are essential and basic such as how much in total you owe as debt and to whom, what kind of loans you owe. Keep all the important papers regarding your debts at a safe place. Pay on time, this will reduce your interest rate and will also help in establishing a good credit score. Not paying on time will lower your credit rating, hence showing negative records in your credit report.

Compare the loan options and choose the best one that suits you, the one you can afford easily. Many lenders offer discounts or benefits that lower your interest rate, search for them. Go for the best repayment plan which suits your way.

There are usually three kinds of repayment plans; Standard, Graduated and Income sensitive. In a standard repayment plan one is entitled for monthly payments that are fixed with an extended payment term up to 30 years. In graduated repayment plan, monthly payments are fixed for initial 2-3 years but gradually increase after that. In income sensitive plan, as the name suggest, monthly payments are based on the income you earn.

If you are considering the option of loan consolidation then you must find out if you are eligible for it and moreover is consolidation beneficial to you. Consolidation occurs when a single lender pays off all your scattered debts and then makes the total balance a consolidation loan with a fixed interest rate and a monthly payment. This will in turn make your total balance higher and hence will increase the time limit for repayment, reducing your monthly payments.

To decide upon consolidation there are few pre requisites such as one should have more than a fixed amount in federal loans to reap the benefits of consolidation. This fixed amount is usually $10,000. Moreover all the loans you wish to consolidate must be under your social security number. Never go for consolidating private and federal loans. Let your monthly payments be deducted automatically from your bank account, this will allow you a discount.