It is not unusual for students to acquire debts while earning a college degree. In general, a student must start paying for these loans after graduation. If you have several loan payments to make, it may be a good idea to consolidate your loans and make only one repayment every month. Refinancing your loans may also help reduce your student loan payment.
When the time comes to start paying your student loans, you will have to work with your lender to manage your payments. Paying for federal loans may be more budget-friendly, but you should be able to negotiate an affordable repayment scheme for private loans as well.
Be ready with your budget so you will have an idea how much you can afford to pay each month. You have to let your lender know what amount is practical for you.
You have several options available to reduce payment on your loan. You may be able to arrange for a repayment plan that fits your budget better, such as a graduated payment where initial payments are lower, gradually increasing over the loan's term. Although the accumulated interest may be higher, you may find this option more affordable. Some federal student loans also allow an income-based payment plan.
As long as you do not default on your loan there are other options open to you, such as applying for a loan deferment. Deferment allows you to stop making payments for a specified period of time. You may be allowed to defer your loan payment while you look for a job, or if you decide to go back to school.
You can also apply for loan forbearance. This will allow you to make reduced payments on your student loan or stop paying temporarily. Forbearance is easier to obtain than a cancellation or deferment of the loan. It can be granted for a variety of reasons including poor health, inability to pay within the maximum loan term, and unforeseen personal problems. Interest continues to accrue, unlike in the case of deferment, and the interest charges become part of the principal.
Student loan consolidation or refinance can provide a long-term solution that will help reduce your payments. If you can get a lower interest rate, you can consolidate all your different loans into one, reduce the monthly payment amount, and make only one monthly payment. Compare your existing loan interest rates with the new rate should you decide to consolidate your loans. Make sure your new interest payment will be lower.
Defaulting on your student loans can bring about dire consequences. Before this happens, take the necessary steps to make your payments more affordable.
After meeting with Michigan Credit Union League executives and credit union CEOs in the new Howell High School to discuss the Credit Union Regulatory Improvements Act (CURIA) and other issues, Congressman Mike Rogers, R-Brighton, visits the LOC Federal Credit Union student-run branch just down the hall.
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