With the FAFSA (Free Application for Federal Student Aid) deadline fast approaching, student loans are on the minds of many parents and students preparing for their first year of college.
As you prepare for the financial commitments associated with student loans, there are some important things to know before graduation day comes, and the repayment period for your loan begins. While it may seem far away, that day will arrive sooner than you think, so here are five things you should know about student loans before you graduate:
- Types of Student Loans – When you’re approved for a loan, be sure to educate yourself on the type of loan you’re committing to – whether it’s a federal, private, state or school loan, or a combination of these, different types of loans have varying terms and it is crucial for a borrower to know the difference.
- Loan Interest – Student loans are just like any other type of loan, and the money you borrow needs to be repaid, with interest. If left unpaid, interest may be added to your principal loan amount, so staying cognizant of it and making your payments on time to avoid this from happening is crucial.
- Loan Balance – After college, this daunting number will come to the forefront of your mind, but thinking about this number ahead of time can not only make it seem a bit less intimidating, it can help you determine how best to structure your repayment plan.
- Repayment Options – When the time comes to begin paying off your loan, some have flexible repayment options such as tying your monthly payment to your income or combining loan payments into one. Always check with your lender to see how you can optimize your repayment options.
- Terms and Benefits – Well before graduation day arrives, you should be aware of your student loan terms and benefits, including policies regarding forgiveness, cancellation, discharge options, saving interest with automatic debit enrollment, grace periods, deferrals, and any additional fine print.
While most student loan terms grant a ‘grace period’ between the time you graduate and the time you’re required to begin repaying your loan, being prepared and educating yourself about your student loan never hurts. When in doubt, your loan provider or financial aid office can always help.