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How Do Student Loans Work

Charles Said:

How do my student loans work?

We Answered:

How the extra money is applied depends on the specific terms of the loan; best bet is to call the loan company and ask. My extra student loan payments used to pay the interest balance then reduce the principal and they would push out the next payment due date. Then I changed my repayment plan and now my extra payments are applied the same way except the minimum payment is still due the next month. I really liked it the old way because I was saving money on interest by paying down my loan earlier, but also had a little safety net in case I couldn't make a payment the next month.

Vickie Said:

I have a question about student loans and how they work?

We Answered:

The way student loans work (or at least federal ones) is that you have to apply for them, through the Financial Aid office at your school. After you apply, you will find out what kind of Aid you are eligible for - subsidized loans, unsubsidized loans, grants and workstudy. Grants and workstudy do not have to be paid back. After you graduate, unless you defer repayment, you are given a 6 month grace period before you must start to repay your loans. There are 3 different categories for repayment, they each are a different monthly payment. It all depends on what you can afford. The longer you drag out repayment, the more you end up paying because of interest.

Adam Said:

How do student loans work once you are married?

We Answered:

The answer is really yes and no. Yes the loans will show up if they apply for things such as credit cards, car loans, and home loans. No, since the debt is previous to marriage it would be very difficult for her or the holder of the debt to make him pay it. It could be held against her estate if she died. They can still garnish your entire tax refund if you go into default on the loan (both your refund and hers) unless you file married filling separately. In essence the loan only affects those things they will do together, especially credit issues.

Beverly Said:

How do student loans work? Once I start paying them back, do I have to pay back consistently?

We Answered:

It seems like everyone who answers on this subject just refer you to a website. Here's my knowledge so far on my son's student loan... He just got accepted for his first fiscal year in school and the fine print states that if you pay $1000 when your payment is only $250 (example), then your next payment wouldn't be due until after those other payments are paid from what was left of the $1000, meaning, you have an extra three months of payments paid from that money before you had to pay again. Make sense? But no matter if you overpay or pay monthly, you do need to make sure you pay on time, or it could affect your credit rating. I'm not sure what you're saying on your second part, but all loans have a minimum payment due each month, if that's what you're talking about. So what it comes down to is that you can always pay more than what you owe. No bank will turn down money early.

Roland Said:

Can someone please explain how financial aid and student loans work?

We Answered:

Finical aid comes in many different forms. The ones you want the most are Pell grants, other types of grants, and scholarships. These types of aid is money from the government that you don't have to pay back. Pretty much, free cash for college. Loans are required to be paid back. Most student loans have a low interest rate, which is good, and don't require for you to start making payments on until 6 months to a year after graduating from college.

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