The impact that higher education will have on your life is priceless. However, actually attending college does come at a cost. Hopefully you can pay for your tuition with scholarships and grants but, if you’re like many students today, you may have to rely on loans to help you pay for your education.
While it’s tempting to not think about your loans until your senior year of college, it’s much less stressful in the long-run if you start managing them while you’re still in school.
- Know The Conditions Of Your Loan
This is as basic as knowing what type of loans you took out. Did you take out any federal or private loans, and are they subsidized or unsubsidized? The type of loans you have will tell you the following:
- If they will accrue interest while you are in school, or only once you have graduated.
- What is required of you to maintain your loan without having to repay it until you graduate. This refers to your academic standing (your grades) as well as your attendance status as a student (part time or full time).
- What the loan’s grace period, forgiveness, and repayment options are. If you need to take a semester off, it’s important to know if the loan provider will want you to apply for a deferment, or if you will still be within their grace period by the time you go back to school.
Being aware of your loans now allows you to prepare, and avoid being surprised when it’s time to pay them back. We wrote a while back that will help you learn more about your main loan options, The Quick and Dirty Guide to Your Student Loan Options.
I’m not referring to sending them a Christmas card. What I do mean is that it is important for your contact information to always up-to-date and that you read everything they send you. If they do not have your current information, or you do not read their mail, you could be missing out on vital information pertaining to your loan.
Your loan money can be used for cost of living expenses as well as tuition with proper planning and budgeting. Just because you have that loan money, does not mean that you should spend it on whatever you like. If you can, set some aside in a savings account to use later, either for emergencies or to repay your loan. You’ll also want to try and calculate out your expenses ahead of time, that way you won’t take out more money than you need.
I realize that this depends on your financial situation, and that it may not be possible for everyone to make loan payments while they’re in school. If you can, I suggest you start with your largest/highest interest-rate loan. These are some of the benefits that come from making payments on your loans ahead of time:
- You are technically not required to make payments while you are in school and in good academic standing. This makes it a great time to build good habits and practice managing your money, since there is no penalty for missing a monthly payment.
- Making interest payments now will keep your loan from getting larger, meaning that it may take less time to pay off than it would if you waited until you graduated.
- You can deduct your interest payments and get more money back when you file your taxes.
Remember that you are not alone, and that most students are in the same boat you’re in. If you’re feeling overwhelmed, relax and breathe. Realize that the fact that you aren’t alone means that you don’t have to reinvent the wheel when it comes to managing your loans, as evidenced by these top 100 guides on student loans we put together.
A college education can shape your life in myriad of ways. You are taking a great first step by staying ahead of your loans now rather than waiting until you graduate.
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