Graduation does not mean the end of all that is college-related. Once students enter the grace period following college, the clock is ticking for them to refinance their student loans. For these former students there are certain steps that must be completed, along with other options that can make life a lot easier.
In some cases, for example, consolidating your Federal Stafford Loans before the end of your grace period can automatically lower your interest rate bya fraction of a percent. This may not seem like much, but add this to other rate reductions and borrower benefits you are offered and it can make a significant difference.
When considering options for refinancing your college loans it is helpful to use a loan calculator. Using a loan calculator can help to estimate the total amount you will have to pay back over the repayment period, including the principal loan plus interest. It can also estimate how much your monthly payment will be.
You can then factor this into your monthly budget of bills, housing, food and other expenses so your finances are always in order. The benefit of the calculating an estimate is clear. Knowing exactly what your loan debt will be allows you to factor in any other types of debt and bills and then create a plan to manage your time and money.
Are you planning to attend graduate school in the future? Stay informed about the loan industry and watch out for any significant changes. Interest rates, deadlines and loan maximums may change dramatically over the course of a few years, or even just a few months.
For example, lenders limit the maximum amount that a student is able to borrow over the course of his or her education. If maximums drop before you return to school it could reduce the funds available to you. Then you would have to take out additional loans or find other non-repayable sources of education financing.
PLUS Loans disbursed between July 1, 2006 and June 30, 2007 came with an interest rate of 7.94 percent. Loans in the following year beginning on July 1, 2007 were raised to 8.02 percent. These rates can change again on July 1 of this year.
The topic of student loans has even found its way into the upcoming Presidential Election, and become a topic of controversy among those vying for the 2008 Democratic nomination for President. Illinois Senator Barack Obama and former North Carolina Sen. John Edwards both introduced plans to abolish current programs and move all student loans to direct lending. This would mean that colleges would distribute loans to students from the government, rather than banks.
Senator Hillary Rodham Clinton of New York has proposed creating a Student Borrower Bill of Rights. This would include issues like expanding eligibility and placing income-based limitations on monthly repayment.
Monitoring such events and changes—as they happen— will only help you better prepare yourself, and can assist in avoiding any unnecessary delays or obstacles.
As a former student it is also useful to create a schedule for yourself. Set aside time each week or month, to research any pertinent news about the student loan industry; set a specific date each month to pay your loans so you do not forget and miss a payment. Most loan companies offer an automatic payment option where a set amount is deducted from your checking account at the same time every month. This will help borrowers avoid confusion, particularly now that they have careers, families and other endeavors to occupy their time.
These automatic payments come with another benefit for the former student. Most lenders offer rate reductions for enrolling in these payment programs; some offer another rate reduction for a certain number of consecutive and timely payments.
If you maintained a good credit history throughout school, you will reap the fruits of your labor afterward. When dealing with loan companies and consolidation options, a good credit history will go a long way. It is important to maintain this no matter what—especially if you plan on pursuing graduate school. Former students will have an easier time getting loans for graduate school by maintaining excellent credit scores and not defaulting on loans.
With the number of people in the United States attending college on the rise and the competition for jobs ever increasing, many employers are requiring their staff to continue their education. Master's and doctorate degrees are becoming more sought after in today's competitive job market. The transition from undergraduate to graduate will be much easier for those who have kept an eye on the ever-changing student loan industry.
