About Repaying Student Loans
Student Loans are a form of financial aid designed to assist students in covering the costs associated with attending college when personal resources, scholarships, and grants are not enough to cover the total cost. As a part of a financial aid package, student loans differ from the other components of financial aid such as grants and scholarships, as, rather obviously, student loans have to be repaid. However, if you do your research, you can find the student loan that is best for you and minimize the amount you will have in repaying student loans.
Types of Student Loans
There are essentially two kinds of student loans available: private student loans and federal student loans. Federal Student can be either subsidized or unsubsidized, depending upon financial need. To determine eligibility for federal student loans, students need to submit a FAFSA (Free Application for Federal Student Aid) so that their financial need can be determined. The calculated need figure will impact the amount and type of federal student loans awarded. If federal student loans are not enough to cover the cost of college, then students can turn to private student loans as a final source of funding. Students can apply for private student loans through private lenders, such as banks or credit unions, as well as through dedicated lending institutions, such as Sallie Mae.
Repaying Student Loans
Repaying student loans differ with the type of loan borrowed: federal versus private, subsidized versus unsubsidized, fixed interest versus variable interest rate, etc. The following are some basic guidelines/generalizations that may apply to repaying student loans.
Q:How should I go about paying back student loans?
A:Paying back student loans becomes a lot more difficult when you have multiple loans. Each loan has different terms and conditions and different payment schedules, amount, and the payment is due at a different date. For students who cannot handle the pressure of multiple loans, loan consolidation can make their lives easier. Students can consolidate their loans and have one simple amount due at one point per month to a single lender. At times, loan consolidation can also get the borrower a reduced installment each month to be given for a longer period of time.
Q:My search for repaying federal student loans mentioned consolidation. How can consolidating loans help me?
A:Consolidating loans can help to lower the monthly payments and to increase the time period of repayment. Students consolidate loans when they are having trouble making those monthly payments. Consolidating essentially combines all of the loans together into a singular loan. Take note: students should avoid consolidating especially when they are close to paying off the loan entirely.