There is a narrow window (billing cycle of between 21-25 days) to avoid interest charges if balances are paid in full. Loans may be deferred until after graduation, or interest-only payment may be made during school. If you don't pay the interest, it will be added (capitalized) to your loan balance following the grace period, at the start of repayment.
“If you refinance a federal loan into a private loan, you walk away from important federal benefits and consumer protections, such as income-driven repayment, loan forgiveness programs, default resolution options, flexibility during times of hardship and discharges based on disability or death of the borrower,” said student loan lawyer Adam S. Minsky.
A little-known way to eliminate college debt is to appeal to your boss for a compensation package. “Some midsize companies cannot pay the kinds of salaries that a large corporation can, but they may be inclined to offer lower wages in exchange for a onetime payout toward your loan,” says Manuel Fabriquer, the president of College Planning ABC, a consulting firm in San Jose, California. Why? “It costs them less in salary payments in the long run.” (Those in fields that require a special degree, like tech, finance, and nursing, are most likely to receive this benefit.)
You may have already realized that automatic online loan payments make your life easier. What you may not know is that all government and some private lenders charge a slightly lower interest rate (usually 0.25 percent less) if you make your monthly remittance this way. Over 25 years of payments, you’ll reduce your repayment period by at least a year, says Reyna Gobel, the author of Graduation Debt ($15, amazon.com). Best of all, you can sign up now, even if you’ve been repaying your loans for years.
If you have good credit, you can usually get a better interest rate. You can also choose a shorter repayment term so you can pay off your loans faster. The downside is that you give up protections like deferment of income-based repayment plans on federal loans, which puts you at risk if you lose your job and can’t afford student loan payments for a while.
Whether it’s completing the FAFSA to get federal student loans or submitting an application to a bank for a private student loan, applying for student loans can seem like a complicated process. There are a lot of steps and information needed from students and their families, so this guide can help you prepare for and navigate through any student loan application process.
Disclaimer: Views expressed may not necessarily reflect those of Citizens Bank. The information contained herein is for informational purposes only, as a service to the public, and is not legal advice or a substitute for legal counsel, nor does it constitute advertising or a solicitation. You should do your own research and/or contact your own legal or tax advisor for assistance with questions you may have on the information contained herein.
Hi Michelle. Does your spouse have any student loans? If so, his/her loan debt can be taken into account when calculating your payment. Also, the new Revised Pay As You Earn Repayment Plan doesn’t require that you have a financial hardship, so you may qualify for that. Have you read this post: https://blog.ed.gov/2016/02/which-income-driven-repayment-plan-is-right-for-you/
If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come from the federal government, from private sources such as a bank or financial institution, or from other organizations. Loans made by the federal government, called federal student loans, usually have more benefits than loans from banks or other private sources. Learn more about the differences between federal and private student loans.