Student Loan Payment: What You Need To Know

Act Now to Avoid Large Student Loan Debt

In reality, you really should start considering how you are going to pay back your student loans before you even accept them.

Subsidized vs. Unsubsidized Student Loans

It is important to pay close attention to the amounts that you are awarded when you are given a loan, and it is also very important to notice if the amounts you have been given are subsidized or unsubsidized.

A subsidized loan is given to the recipient based on their financial need. This type of loan is most advantageous to the borrower because he or she will not accrue any interest on the amount borrowed until out of school and beginning student loan payment the government will “subsidize” the interest, meaning they will pay it for you while you are still in school.

Unsubsidized student loans are often necessary, but they are not as advantageous to the borrower as a subsidized loan. These types of loans begin to accrue interest as soon as they are accepted, regardless of when you begin your student loan payment. It is important to note that you do not necessarily have to accept every loan that you are offered. The less you borrow, the better off you will be in the future.

US Federal Government Loans and How They Work

Federal loans for students are, most always, the best loans because they have the lowest interest rates. If you are a student and taking out loans for yourself, there are two different types that you may be eligible for. The first and most common is the Stafford Loan. The Stafford Loan is a subsidized that does not accumulate interest until you have finished your schooling. It is also important to note that, should you choose to go to graduate school after obtaining your undergraduate degree, you will not have to begin student loan payment for the Stafford Loan until you have completed your graduate education.

Another, but less common type of loan for students is called a Perkins Loan. This type of loan carries a very low interest rate around five percent at the time of this writing but they are only given to individuals who show significant financial need. Because of these strict stipulations, most will not receive these loans.

It is important to note that in order to be eligible for either of these loans, you must fill out the Free Application for Federal student Aide, also known commonly as the FASFA. The government will then decide, based on the information that you provide to them, how much they are willing to loan to you. Naturally, the less that you borrow, the less your student loan payment, over time, will be. But, if you need to borrow, a federal loan is the best way to go at this time.

There are also federal loans available that your parents can take out to help you with your student loan payment. These are called PLUS loans, and they allow for the parent of a student to borrow the remainder of what is needed to put their child through school in a sense, they can cover all of the costs that you might not be able to cover with your own financial awards. PLUS loans carry a 8.5 percent fixed rate of interest for the duration of the loan. Studies show that only a small percentage of parents are actually taking advantage of this loan, though it is very advisable, and, in most cases, the best way to meet remaining costs.

Plan Ahead for Student Loan Payment

The best way to make sure that you are not crushed by the financial weight of a large and ominous loan is to never take one out in the first place. While, surely, you do want the best education out there, you should also consider the price of attending any school before you commit yourself to it. The average debt owed after college is $19,000. This is reasonable, considering that the average yearly income for someone with a bachelor’s degree is around $54,000. However, it is important to note that these are averages, and, therefore, there will be people who owe much more than the average after college and will also make much less yearly than the average.

Planning for anything under $25,000 in debt owed after graduation is, by most loan counselors, considered reasonable, but the ultimate decision is up to you. A great education does not have to cost you an arm and a leg, and there are many ways to keep the cost down. Student loan payment does not, necessarily, have to be a huge burden.

How to Keep the Cost of Your Education Down to Avoid Financial Ruin

In these trying economic times, more people than ever are choosing to begin their college education at a community college. The average cost of yearly attendance at a community college is just above $2,000; public 4 year institutions have an average tuition and fees of just above $7,000, and that price is doubled for the year, in most cases, if you plan to live on campus in a dorm and take advantage of some sort of meal plan.

You can see, then, that there are many choices that you can make that can keep you out of debt and keep your required student loan payment at minimum. Many of these tips are glossed over when that glossy catalog from a very expensive institution comes in the mail and promises you a happy life with all of the things you’ll ever need and more.

Finding A Student Loan Payment Calculator

You must be thinking, what the heck is a student loan payment calculator and where do I find one? Have they actually manufactured a special calculator just for student loans? Before you head to the student book store, let us be clear that to date there is no student loan calculator on the market. It is simply a software program for student borrowers to give themselves an idea on how they will manage their loan repayments.

In order to get a clearer picture of what a student loan calculator does, you must fully familiarize yourself with the concept of a student loan. A student loan is basically a form of financial funding in order for college students to pursue their dreams of getting their most coveted college degrees.

Such kind of financial help can come from a variety of lenders and they also come with different sets of terms and conditions, interest rates and repayment terms. Because of this, the student borrower must plan ahead on how the regular monthly repayments of his student loans will be structured. Think of the loan payment calculator as a repayment planner for student debts. In fact there is no difference between a regular loan payment calculator and one used just for student loans.

To get an estimate of how much your regular student loan payments will be, the repayment planner for student debts/payment calculator will compute them for you based on the variables present. These three variables will come in the form of the principal loan amount (total money borrowed), loan interest rates that apply and the payment terms or number of monthly repayments the borrower is willing to make in order pay the loan in full.

Once the three variables are taken into consideration, the loan payment calculator will give a helpful approximation of how much your monthly loan repayments should be. Remember this is just an estimate to help you in your planning for loan repayments.

The loan repayment calculator will also give you an idea of how much the actual interest charges you are paying and how much your targeted minimum salary should be in order to have sufficient cash flow ri live on and still make your payments.

There are a lot of good loan repayment calculators you can choose from online. There are many easy to manage programs which will help you get a bigger picture of personal loan management. If you find that you still have some questions you have regarding your student loans, it is best to meet up with your loan servicing institution or loan provider to get an accurate estimate of your loan payment schedule.

So despite all the hype there really are no student loan payment calculators. If find someone who is selling one then you should assume it is a scam. You can get all the loan payment estimates by just using an on line loan calculator.

Student Loan Payment Options

If you have a high amount of student loans that you are struggling to pay off, then you may have questions about how to handle it. There are provisions with most types of student loans that allow you to defer payments or adjust payments to meet your needs. Check with your lender for specifics. Here, we will discuss common options when it comes to paying down your student loans.

If you are really in over your head and have considered bankruptcy, be prepared. Bankruptcy is not an option for federal student loans. They will not go away or be discharged even if you are filing bankruptcy. You do have some options though. You can apply to change the pay off terms of your student loans. Instead of struggling to pay them off in ten years, you can stretch them out to thirty years. This, of course, would end up costing you more interest in the long run, but it could relieve the stress of large monthly payments. If you’re missing payments because they’re too high, then it will end up costing you more anyway, not to mention that you can ruin your credit by missing payments.

Filing bankruptcy with a private student loan is not any better. There is a provision for undue hardship, but the standards are extremely hard to meet. If you can meet the requirements, then it is possible to get a private student loan discharged. This provision is very rarely awarded. You should consider different ways of paying off your student loans if possible.

One option is to talk to your lender about a graduated repayment plan. This plan allows you to start out at low payments that steadily increase over time. This gives you some time to build your income up to a point where you can afford the larger payments. Payments are figured generally once every two years, so you have some time to prepare when the payments increase.

Another option is setting up an income based repayment plan. This plan uses your adjusted gross income each year to figure the payment that you can afford. The payment is based also on the size of the loan. How many members you have in your family is also taken into consideration. Many find this a very effective way to budget for student loan payments.

In times of extreme hardship, you may qualify to defer your loan payments. This doesn’t mean that they are discharged or gone, but simply put off until a later date. Many types of student loans will not have interest accruing during the deferment period. If you don’t qualify for deferment, you may qualify for forbearance. Forbearance is like deferment, in that you can postpone payments for a set length of time. Unlike deferment, forbearance options do accumulate interest during the period that you are not making payments.

In general, you should try to pay off your student loans whenever you come into extra money. All debts need to be taken seriously and you should always pay as much as you can afford. If you are in some trouble and need to change the terms or put off monthly payments for a while, contact the custodian of the loan. Manage it well, and you can be on your way to paying off your student loans.