Help With Your Student Loans

Consumer Finance - September 4, 2017
Graduating woman in black cap and gown

The cost of higher education continues to rise. In the United States, total student loan debt is now greater than that of credit card debt. It is important for students and potential co-borrowers to understand the various types of loans, as well as the resources available during repayment.

Type of student loans

Subsidized loans are awarded to students based on their financial need. While the student is in school the federal government pays any interest on the loan. Therefore, subsidized loans do not gain any interest before the student enters repayment. This will save the borrower a great deal of money over the course of repayment.

Unsubsidized loans begin accruing interest when the loan money is first disbursed. If this interest goes unpaid, it will be added to the loan’s principal. This means the borrower will pay interest on the principal of the loan, as well as any interest that has already been added to the balance of the loan. This will cost the borrower a lot of money in additional interest over time.

Credit Cards have become readily available and widely used by college students in recent years. The interest rates on credit cards are generally higher than those on both subsidized and unsubsidized student loans. In addition, borrowers must make monthly payments. Failure to make payments on credit cards can lead to a poor credit score and can affect an individual’s ability to obtain further credit or even find a job.


Grace periods are offered by many student loans before repayment begins. Make sure you know the grace period duration for your loans so you are prepared when payments become due.

Discounts may be available for borrowers who set up auto-payment for their account. Many lenders also offer reduced interest rates for borrowers who make timely payments.

Consolidation may benefit some borrowers. Consolidating loans with one lender allows the borrower to make one monthly payment. It may also be possible to lock in a lower interest rate with a consolidated loan. Borrowers should beware, since consolidating student loans may exempt them from some beneficial repayment programs.

Failure to pay student loans can have a serious effect on a borrower’s credit. You should contact your lender immediately if you are unable to make a loan payment. You may be able to change your payment date or the structure of your repayment plan to better accommodate your budget.

If you are experiencing financial hardship, you may be eligible for deferment or forbearance. Contact your lender to learn more about your options. Need legal assistance? A LegalShield provider lawyer can help.