Survival Guidance for Student Loan
Stephen Glover was planning on marrying his future fiancée Kimberly, planned on taking a honeymoon to the Bahamas, purchase a new home, and began a great new chapter in his life. The only problem, which was keeping him from obtaining these goals in life, was the $25,000 in student loans he borrowed from EdAmerica and Wells Fargo while attending the University of Georgia. Mr. Glover, 26, had knowledge about if he had started to fall behind on his monthly payments on his student loans, that the U.S. Department of Education had the power to garnish wages, tax refunds, and Social Security payments, if he was receiving them. The Internal Revenue Service was the only agency before who had the power to do such garnishments. Ms. Chester, who graduated in 2002 from the University of West Georgia, had knowledge about deferments and forbearance and utilized them to her advantage.
A deferment allows the borrower to delay or postpone payments for a certain period of time and also allows the borrower to choose to pay the interest on it or not. Mr. Glover was granted a deferment and did not have to make a single payment for nine months. By not having to pay on his student loans, the extra money went toward his wedding, honeymoon, and his house. Even though Mr. Glover was granted a deferment for his student loans, there are several different methods that can be used to maintain student loan payments. Here are several suggestions to help ease the stress with student loan repayment.
The average student loan debt was $16,500 for the academic class of 2001-02. But with the increase in tuition and other school related expenses, the average college debt is increasing significantly and college grads are finding it difficult to manage their bills. Choose the right repayment plan which fits your income and budget. There are a several loan repayment options - income-based, interest-only, fixed payments, etc. Each repayment option allows the borrowers to choose the best plan for them. Each repayment option basically meets the need for borrowers who are in situations where they need to minimize their monthly payments. Always pay your student loan by the due date. Some lenders offer lower interest rates when you pay on time consecutively. Be sure to always update your lender with current home address, phone numbers, and email address.
The best way to pay your loans back is to pay electronically. Set up an automatic payment plan with the lender. By doing it electronically, you will not have to worry about forgetting to pay or being late. The money comes directly from your bank account or credit card. Just a reminder, make sure the money is available because you could be charge with a late fee from the lender and also a fee with your financial institution. Paying electronically also builds good credit.
A number of lenders have been known to lower interest rates if you choose to set up electronic automatic payments. For instance, one borrower saw her interest rate drop from 4.60% to 4.10% once she changed to electronic payments. From $275 to $145 is what she was able to lower her monthly payments after she consolidated and set up electronic payments.
Before beginning your college career, you should take the time to budget your educational expenses. Sometimes you might not have to take out a student loan. Majority of students chose to apply for a student loan before researching any available scholarships and grants. Every year millions and millions of dollars in scholarships and grants are not used because of lack of applicants. Students and their parents, who research and explore scholarships and grants and create a reasonable budget, generally discover ways to finance their college tuition and expenses without borrowing a large student loan.
Do not become discourage because you have a larger amount of student loan debt, because student loan debt is well thought-out as good debt. Compared to credit card debt, you can not get forbearance and deferment if you are facing a financial hardship or go back to school, chose a flexible repayment plan, or competitive interest rate.
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