If you’ve recently finished school and are currently in your six-month grace period before you have to make your first student loan payment, you may have questions about the best way to tackle your debt. Yes, you can simply make monthly payments on your various loans, but with a little planning, you can save thousands of dollars, minimize your monthly payments, and improve your credit score in the process.

Currently the average undergraduate finishes school with over $16,000 in student loans. For many students, this hefty amount owed is piled onto existing debt such as car payments and credit card bills. So, if you feel overwhelmed with what you owe, you are not alone. Rest assured, however, you can tackle your debt successfully and effectively by taking a proactive approach.

First, remember that your student loan debt is probably at an interest rate much lower than your credit card debt. The highest interest rate on student loans compares favorably with the exorbitant rates issued by credit card companies. With rates as high as 30 percent, concentrating on paying down credit card debt should be a primary focus.

If you have no other liabilities other than student loans, congratulations! But, you’ll still need to be strategic about how you will pay back what you owe. Most standard student loans have a ten-year payback period and a monthly payment schedule, but there are many more cost-effective options that are worth exploring.

Before you make that first payment, call your lenders and verify what the monthly amounts will be. If you simply cannot afford to make the payments, ask about alternative payment options. Most lenders offer graduated payment plans where monthly payments start about 50 percent below the standard amount and gradually increase over time. As well, you can frequently extend your repayment period up to 30 years. However, you will need to be careful about paying so little per month that you are only paying interest and no principal.

Another very effective way to decrease what you are paying each month is to is to consolidate your loans by doing a student loan consolidation. This is a great option for borrowers who have several loans at different interest rates. By consolidating these loans, you can lock in a fixed interest rate, lower your payments, and extend your repayment period. Also, consolidation can be quite beneficial for improving your credit because existing loans will be paid off before a new loan is issued. You can ask your current lenders if they offer consolidation plans. If not, there are many lenders who can help you with your loans, and you are able to consolidate during your grace period. Make sure to ask about interest rate discounts that are usually offered for signing up for auto-pay and for having extended on-time payments. Most borrowers who consolidate their loans will save a substantial amount on their monthly payments, up to 60 percent each billing cycle. However, remember that the interest rate on consolidated student loans changes every year on July 1st. Thus, if you are considering consolidation, make sure to submit your application well before this date. Interest rates will be going up more than 2 percent this year, so don’t delay.

If you are approaching the end of your grace period, and you are currently unemployed, disabled, or planning to return to school, you can defer payment on your loans for up to three years. The government will pay the interest on your subsidized loans during this time.

Like deferment, forbearance is another option to delay repayment for as long as three years. You can apply for forbearance by proving financial hardship to your lender. However unlike deferment, you will be responsible for accrued interest during the forbearance period.

No matter how you go about repaying student loan debt, by all means, do not default on these loans. There are serious consequences for not paying back what you have borrowed. Defaulted loans will appear negatively on your credit report, and this may prevent you from qualifying for other types of credit such as mortgages and car loans. As well, defaulted loans will be turned over to a collection agency, and you could possibly be sued. You may even have your wages garnished or your income tax refunds intercepted. And, of course, you will not be able to apply for additional student loans until you either repay the loans in full or make payment arrangements with the lender.

Yes, paying your loan payments is the best way to prevent defaulting on your student loans. Also, make sure to notify your lender with any changes that affect your loans such as name changes or new addresses and phone numbers. If you do experience financial difficulty, don’t delay in asking for forbearance, deferment, or an alternative payment plan. Once you have defaulted, you won’t be able to qualify for these options. And, don’t forget to keep careful records of your loans. Save promissory notes, cancelled checks, and letters that you send to your lender.

Tackling your student loans is possible, and with a little financial know-how and advanced planning, you can customize a payment plan that will work with your financial status. So, go ahead and get started! The sooner you take control of your debt, the sooner you will pay it off.

By: Mike O’Brien

There are a lot of expenses associated with your college. As a result, a student loan can really help. You will not need to worry about the source of fund when you get the loan approved. Besides, there are also other advantages for getting a student loan.

In fact, there are people who think that it is too troublesome to apply for a student loan. Yes it is true that you need to do a lot of things and complete a lot of forms before you get approved. However, you have to go through these processes if you want to be worry free about your expenses in college.

One of the advantage of a student loan is that you do not need to repay before you graduate if you are getting a federal loan. As a matter of fact, you do not need to repay immediately after graduation either. It will let you have some time to seek for a job before you have to repay. You will start repay about 6 months after you graduate.

Of course the case will be a little bit different if you are going to get a private student loan. In this case you will probably need to pay for the interest when you are still in the school. However, the interest will not be a large amount at the end of the day. If you are paying the expenses with your credit card, you will have to start repaying after the grace period. And student loans certainly have their advantages.

Considering the types of students loans, if you are getting a federal loan, there is a type called subsidized student loan. Students who need financial assistance may get this type of loans. If you get a subsidized loan, no interest will be counted before graduation.

At this point you may probably know that another type is unsubsidized loan. In this case the interest during the time you are in the college will be counted. However, in both cases you will only need to repay after graduation, an mentioned.

You can see that there are a lot of benefits if you can get a student loan. Of course there are students who are wealthier and they do not need to consider such loans. However, to most students, a student loan can really help them to concentrate on studying rather than worrying about source of fund.

By: Jerry Leung

by: Gray Rollins

Students have many options for financing the cost of college. Loans are just some of those options. However, all avenues for securing scholarships and grants should be pursued before trying to find a loan. This is because scholarships and grants do not have to be paid back, while loans do. There are many different types of loans available for consideration, and many factors of which you should be aware.

First of all, it’s best to get your Free Application for Federal Student Aid (FAFSA) in early. In fact, it should be turned in as soon as you or your parents have mailed in your annual income tax forms. While the federal government uses this information in order to assess your need for aid, state governments also offer grants based on your form. Most of the time these state grants are first come first served, so the earlier you apply the better chance you have of receiving this type of financial aid. Also, this is the method in which you apply for government loans as well.

If you find you did not receive enough aid to cover your expenses, move on to applying for a loan. There are several types of government loans to consider. The first is a Parent Loan for Undergraduate Students (PLUS) which puts the responsibility of repayment on parents, at an interest rate that’s currently 8.5 percent. There is no limit on the funds, and repayment must begin 60 days after disbursement with no grace period. There is a credit check involved. If the parents are denied the loan, the student will have an increased limit when they apply for Stafford loans.

Stafford loans are either disbursed by banks or directly by the federal government. There are subsidized loans, meaning the government pays the interest while you are in school. They are based on need. There are also unsubsidized loans in which you are responsible for the interest which accrues. They are not need based. However, you can elect to defer the interest payments until after graduation. Students are not required to repay these loans until six months after they graduate. Loan caps differ depending upon how far along you are in your schooling. Freshmen can borrow up to $3,500, sophomores up to $4,500, and juniors and seniors $5,000. The limits increase if you are an independent student, your parents were denied a PLUS loan, or if you are a graduate student. These loans currently have a fixed interest rate of 6.8 percent, but some lenders may offer rate reductions based upon your career path, such as for teachers or nurses.

A school based loan, offered with funds provided by the government, is called the Perkins Loan. It is need based, subsidized, and currently has a fixed interest rate of 5 percent. Undergraduates are eligible to receive up to $4,000 per year, while graduate students can receive up to $6,000. Your school’s financial aid office determines if you are eligible to receive this type of loan.

A first time borrower can expect his or her loan funds to be delayed by about a month after those of someone who has borrowed before. This means you should apply for your loan as soon as possible. You will also be required to take an entrance interview in order to receive your payments. You will probably be able to take this interview online. Your financial aid office will assist you in completing the interview.

If you know you are going to need loan money to cover college expenses, check with your school’s financial aid office. Some schools do not accept Stafford loans, so you would need to make other arrangements for a loan or find a school that will accept one. Private loans from banks are an option, but be aware that most of the time you will be required to repay them without a grace period. There are some, such as one offered through U-promise, that can be deferred until after graduation. Also, since they are based upon credit scores, many students may not qualify due to a lack of credit history.

Don’t wait until the last minute. Get your FAFSA filled out, and explore all of your options regarding paying for college. This will ensure a smooth transition and better prepare you for any setbacks that may come along. To find out more about loans go to the best loan site on the web at http://www.loaninfocentral.blogspot.com/

By: keevisr