Quick Tips About Student Loans

College is not cheap!  Many students take advantage of the opportunity to receive assistance for their education.  This investment is important, but being mindful throughout the process is critical!

  1. Know your interest rates!

Interest rates can sneak up on you if you do not pay close attention!  Some key questions to ask about interest rates on student loans are the following:  Does interest apply while I am enrolled? Is the interest rate set?  Is there a ‘grace period?’ If so, how long and what happens to my unpaid interest after my grace period is over?

Some loans are different as to how interest may apply.  For example, the federal subsidized loan does not have interest accruing while the student is enrolled.  On the other hand, the federal unsubsidized loan does have interest accruing while the student is enrolled.

A set interest rate means that your interest rate associated with the loan will not change throughout the entire borrowing period. Federal student loans that you will be offered from the FAFSA will be fixed.  It is good to understand interest rates because some may fluctuate, for example the interest rate on an alternative loan from a bank or a credit union may not be a set rate. Make sure you know where you stand with your loan’s interest rate!

A ‘grace period’ is something offered with federal student loans and it allows students who are no longer enrolled time to defer payments before that have to begin making any repayments to their servicer.  An example is the federal subsidized loan. A student who has recently graduated, will have six months before they are required to make payments towards their loan. The grace period starts the month you graduate. You will want to work with your loan servicer on a payment plan.

Unpaid interest after the ‘grace period’ is important to understand because it matters!  In some cases, after the ‘grace period,’ any unpaid interest will apply to the actual loan itself.  Making payments during your ‘grace period’ can move you out of debt a little faster, but be sure to check in with your loan servicer about that process.

2. Budget accordingly!

Sometimes, taking out the entire loan is not necessary.  It is nice to have the money now but keep in mind, everything has to be paid back!  Working while going to school is something worth taking advantage of.  It could assist with some of your expenses and allow you to take out less money.  Applying for scholarships, no matter the amount, is always worth the shot!  Remember, that is money that you have earned!

3. Become familiar with repayment!

There are many repayment options but what they all have in common is that the money has to be repaid!  If you are feeling up to it, prior to making any payments back, get in touch with your loan servicer.  Ask them about different repayment options and try to get a grasp around the process.  Ultimately, you are better off starting sooner rather than later!


Written by: Karalyn Arnett