student loan horror stories?
i’m in my 2nd semester in college and horror stories about lifelong student loans scare the crap out of me, so i plan on spending every penny i can spare on my loan, which brings me to my question. do i HAVE to pay a fixed amount every month when i begin to repay, or can i make a bigger payment every now and then like sink all my income tax money into it so it will go away faster?
There are no prepayment penalties on federal student loans. This means that, unlike many other types of personal loans, you can pay as much as you’d like whenever you’d like without facing any consequences. This means you could even make payments on your loan while you are still in school, when there is no interest accruing at all if the loan is subsidized–so if you paid your loans off in full before you actually even entered repayment you could essentially repay the loan without a penny of interest having accrued.
Your lender will give you your minimum monthly payment, but feel free to pay more. It is wise to pay as much as you possibly can because this means you will pay much less over time.
I think the loan “horror stories” you hear come from people you borrow unnecessarily and wind up with loan debts that are much more than they can ever actually afford. When borrowing always consider whether or not you can actually pay the loan back. It is not wise to think of only your immediate needs (or wants) when taking out student loans.
Also, please be sure to read every word of your Master Promissory Note and PAY ATTENTION during your Entrance Counseling!!! There is so much necessary information given to you that will be extremely useful to you later. Many students default on their loans because they are unable to pay for whatever reason, when all they could have done in the first place was apply for a deferment! BE FULLY AWARE OF YOUR BORROWER RIGHTS AND RESPONSIBILITIES and you should never have to worry about getting caught in your own loan “horror story.”
