It is estimated that 60% of college students graduate with student loan debt. If you will be applying for a student loan, then there are several things that you need to know. Below are some of the things that you will need to know about student loan debt:
1. There Is a Grace Period
You will not have to make loan payments while you are in school. You will also have a grace period after you graduate. After the grace period, you will need to start making payments. Grace periods typically last from six to nine months after you graduate. Make sure that you check with your lender.
2. You Can Make Payments While You Are In School
While you do not have to start paying on your student loan until you get out of school, you may want to consider making payments while you are still in school. This will not only help reduce your loan balance, but it can also help you reduce interest. Some types of student loans will accrue interest while you are in school.
3. The Consequences of Non-Payment Are Serious
If you fail to make student loan payments, then it could be reported to the major credit bureaus. Your wages could also be garnished. That is why you will need to make payments on time.
4. Student Loans Usually Cannot Be Discharged In Bankruptcy
Many people think that they will be able to get rid of student loan debt if they file for bankruptcy. However, student loan debt is usually not discharged in bankruptcy. In order for student loan debt to be discharged, one must be able to prove in court that the student loan debt has caused undue hardship.
5. There Are Other Repayment Options
If you have trouble making the standard payment, then you will need to contact your lender as soon as possible. You can get a forbearance or deferment, which allow you to stop making payments temporarily. You can also get an extended repayment plan, which can lower your monthly payments. Additionally, income-sensitive and income-based repayment plans are other options.
6. You May Be Eligible For Student Loan Forgiveness
All or a portion of your student loan debt may be cancelled if you are eligible for student loan forgiveness. People who work in a public service job, such as law enforcement, health or public education, may be eligible for student loan forgiveness. People who have made payments for 120 months may also be eligible for student loan forgiveness. Additionally, people who are on an income-based repayment plan may have the remaining student loan balance forgiven after 25 years.
It is important to find out everything that you can before you apply for a student loan. You should also make sure that you understand all of the terms and conditions of your student loans. If you have any questions, contact your lender.
Information credited to Ohio University’s online masters in Engineer Management.