To make education more attainable, a large number of students will use student loans to get through school. If you are considering a student loan, here are answers to some common questions about these programs and what you can expect when you are repaying your loan.
Is loan consolidation a good idea?
If you have multiple loans, consolidating makes paying them back easier by rolling multiple loans into one. Consolidation may lower the monthly repayment amount, freeing some room in your budget for other costs. However, students or graduates should consider consolidation carefully, as it can extend the repayment period, making the loan more costly over its lifetime. Other student loan refinancing options can lessen the length of repayment or lower the interest rate, depending on your situation, to make repayment faster or more affordable.
What is student loan forgiveness?
You are responsible to repay your student loans even if you do not find a job or finish your degree, but certain individuals can have their student loans forgiven, which means they do not have to repay them. Typically, student loan forgiveness is offered to people whose careers serve the public. Teachers and select public service professionals can apply for these programs if they are not in default, but the loan forgiveness is not automatic. You have to apply for it if you qualify.
How does default happen?
Each type of loan has its own periods of default, but in general for federal student loans, you have to be about nine months behind on payments for the loan to go into default. Private loans may have stricter time periods as outlined in the loan agreement documentation.
Do I have to repay my loan if I don’t find a job or complete my degree?
You can’t get out of paying student loans just because you do not complete your degree or find a job in your degree field. However, you may be able to apply for deferment or forbearance, which postpones your payments, due to economic hardship. These programs are available for Federal student loans that are not in default.
Are there any tax breaks for student loans?
If you are paying a student loan, you can get a student loan tax deduction on your taxes. The student loan interest deduction allows you to deduct the interest on your student loans if those loans are used to pay school-related expenses. Keep in mind that if you use any of your loan funds to finance other purchases, like a spring break vacation while in school, you cannot deduct that portion of the interest. The student loan interest deduction begins when you start repaying the loan.
If you have other questions about your student loans and how to go about repaying them, talk to the financial aid department at Globe University for advice.