Clark & Washington

Best Options for Student Loans

After the celebration of high school graduation, heading off to college is the next step. With college comes the tackling of student loans and figuring out which are the best for you. Before signing your future financial status over to a loan provider, consider the following factors:

Types of Loans

There are a few different types of loans for students such as Stafford and Perkins. With subsidized Stafford loans, students are not required to start paying back the funds until after graduation. The interest rates should be under 6.8 percent. These types of loans are typically awarded to students that are in some sort of financial hardship. Unsubsidized Stafford loans require students to pay off all of the accrued interest. Students typically don’t start to pay these loans back until after graduation. Perkins loans are reserved for students in a dire financial need. They are all subsidized, have a fixed interest rate of 5 percent, and the government pays for the accrued interest while the student is in school and for a while after. There are also several private loans available.

How to Choose the Right Loan

When choosing a student loan, the best way to ensure that you aren’t drowning in unmanageable debt after graduation is by choosing Federally funded loans to cover the majority of your tuition and, if needed, private loans to fill in the gaps. Private loans can have very high interest rates and that will hurt when it comes time to pay them back.

How to keep loans under control after graduation

When the time comes to pay back the money you have borrowed, it can be nerve wrecking. But, it doesn’t have to be.

Here are a few tips:

1. Keep communication lines open – Do not ignore your loans, collection calls and mailed warnings. They will not just go away even if they back off for a while. Keep in contact with your lenders so they know you have not defaulted on your borrowed amount.

2. Payment plans – If you are not able to pay the amount your lenders are requesting each month, call them up and set up some type of payment plan based on your income.

3. Pay off the most expensive loans first – If you have several loans as most people do, pay off the most expensive, highest interest rate loans first. This way, the interest won’t build up and make them even more expensive.

Student loans are a part of getting a college education for most people. Knowing which loan is right for you and how to handle them after graduation is key to avoiding financial consequences like bankruptcy and plummeting credit score. If student loans have put you in need of bankruptcy, contact Clark & Washington.

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