It is not uncommon for graduates to end up paying for their student loans for life. It is because education definitely is costly. Of course there are many financial aids you can apply to help you cover all or some of college expenses. However, there are other colleges fees that you still have to pay which add extra burden for you. Student loan is one of the most common financial aids chosen by many college students. While it is relatively easy to earn, it may take years to pay off.
Things you want to know more about paying off student loans
Millions of students take out loans to help pay for their college each year. Loans are helpful for students to pursue an education. The downside is that you start your adulthood steeped in debt. Paying off student loans is possible with the right plan and options. And here are things about paying off student loans you need to know:
Sources of student loans
There are two primary sources of student loans you can take out. They are from federal governments and private lenders. Each loan may come with different repayment options and interest rates. To take out federal loans, you need to submit the FAFSA (Free Application for Federal Student Aid) each school year.
As for private loans, you need to apply directly to the lenders, be it credit unions, or banks. The requirements for these loans are typically more stringent in which your credit score and income will be reviewed thoroughly. You may want to take out federal loans for better interest rates and more flexible repayment options.
Repayment options for private student loans
Private lenders usually have their own policies for loans. For student loan repayment, you can choose repayment option such as immediate repayment, deferred repayment, interest-only repayment, and fixed or partial interest repayment. Make sure to understand each option to help you decide which one to choose. The best option to choose is the one that you can afford each month and the one that offers lowest interest rates. You can always change your repayment plan as needed when taking out private loans.
How much times it takes to pay off student loans
It usually depends on the type of loan you have, the amount of loan, repayment option, and interest rates. It may range from 5 to 20 years. And if you are struggling to pay off your loan, make sure to contact your loan provider immediately. You may be offered changes to your repayment plan accordingly. On average, students graduated with bachelor’s degree pay off their student loans in about 4-12 years.
Should you pay off your student loans in full and early?
It all depends on your financial circumstances. By paying it off early, you can save substantial amount of money and reduce interest rates significantly. Also, you can start paying off at least the accrued interest each month while still in school, you only have to pay for what you borrowed after graduate.