Hitting the Books on Loans
Thousands of dollars are at stake, so read carefully and ask questions
You'll also want to find out exactly what an on-time payment means to your lender. Does being one day late disqualify you? Fifteen days? Other questions: Do you need to request your interest-rate or principal reduction in writing? Is the discount calculated on the original or current principal? Must your loan have a minimum balance to get discounts? Will you lose your discount if your loan repayment is deferred or goes into forbearance?
Consider automated debits. Having your loan payment automatically debited from your checking account is probably the easiest way to get an interest-rate reduction. This should also ensure on-time payments. The discount, usually one quarter of a percentage point, would save you $215 on a $10,000 loan at the new fixed interest rate over 10 years. But you must always have enough money in the checking account to cover the debit. That's not always easy for recent graduates trying to stretch an entry-level salary to pay for rent, food, utilities, transportation- and a loan payment.
Check the repayment period. Find out when loan payments must begin, when interest begins accumulating, the time period for repayment, and whether other repayment options exist.
Always ask questions. "You need to go into your financial aid office and start asking questions, get online, and call each one of the lenders that is on that list that is sent to you," says Chaisson. "Speak to a junior or senior who is already in college and has been dealing with this for two or three years now. Who do they speak to and lend from?" Chad Sinclair, a junior at the University of Maryland-College Park who estimates that he will graduate with $60,000 to $70,000 worth of loans, says, "In the long run, you are the one who is going to have to pay these off, so you need to know what you are getting into."
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