Understanding how to repay college loans

August 2, 2012

When applying for financial aid for moms, it's important to know how you are going to repay any loans you may receive. Student loans can help you pay for higher education, but you have to remember that you must return that money eventually. Each loan will have its own requirements for repayment, but here are a few subjects to pay careful attention to with any loan.

When to repay loans
For federal student loans, your loan servicer or lender will present you with a repayment schedule. Sometimes, you will have a grace period, meaning you do not have to return any money for a certain amount of time after leaving college. Instead, you may be granted time to become more financially stable before your repayment is required.

Direct subsidized and unsubsidized loans and federal Stafford loans generally allow a six month grace period. On the other hand, PLUS loans, which help graduate or professional degree students and parents of dependent undergraduate students, have no grace period. Students should be aware of their specific loans' grace periods and should take note if any circumstances such as active military duty, reenrollment or loan consolidation alter this time allotment.

How to return the money
Payments can usually be made either by mail or electronically. Those who wish to use the electronic option can schedule a recurring debit by contacting their lender. Money granted by loans should be repaid to the lender, so the first step in determining how to pay is to learn who your servicer is. The U.S. Department of Education, which provides many federal loans, has several lenders. For example, the lender for Federal Perkins Loans is often the university attended, but can be a separate organization in many cases.

Which loans to choose
When pursuing a degree and applying for grants, scholarships and loans, students should know how and when they will have to repay their money before accepting the terms of the agreement. Each loan has its own stipulations, and applicants should check the federal government's loan policies. In addition to knowing the lender and amount of time given for repayment, students should research the interest rates for each loan they are offered.

To apply for government loans, fill out the Free Application for Federal Student Aid (FAFSA).  In the 2010 to 211 school year, the U.S. government provided 74 percent of all university student aid. Federal aid is certainly an option to consider, but students should be aware of all aspects of the aid before accepting. 

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