Presentation on theme: "Tudent Loans. Three most common loans: Perkins –Current Rate 5% –Cap 5% –Grace Period 9 months Stafford –Current Rate 3.46& in school & 4.06& repaying."— Presentation transcript:
Three most common loans: Perkins –Current Rate 5% –Cap 5% –Grace Period 9 months Stafford –Current Rate 3.46& in school & 4.06& repaying –Cap 8.25%, –Grace Period 6 months Plus –Current Rate 4.86% –Cap 9% –No Grace Period
“Current Rates” change once a year on July 1 st. “Cap” shows that highest amount of interest you’ll ever pay on the loan. “Grace Period” shows the amount of time you have, after you graduate, before you have to start repaying your loan.
Secret perks for student loans Direct Deposit (save 0.25%) –If you set up your account to have payments automatically withdrawn from your checking account each month, some lenders will give you 0.25% off your loan. –If you have a loan charging your 5.25%, you’ll only have to pay 5.00% with direct deposit. It’s not much, but certainly better than nothing.
Secret perks for student loans Timely payments (save 2%) –Some lenders who offer Stafford loans take 2% off your interest rate if you make your payments on time for four years.
Secret perks for student loans Tax Break (save something) –You can take a deduction of up to $2500 with no need to itemize (make your list). This secret perk starts to disappears as soon as you make $50,000 and is gone at $65,000.
Subsidized Loan “Subsidized” means that the government pays your interest while you’re in school. If you’re offered a subsidized loan and don’t need the money, take the loan anyway, and invest the money in a money market fund.
Student Loan Payment Options Normally when you have to repay your loan, you’re given a “Grace period” of a few month. Then you’re given ten years to repay your loan. Most lenders give you a number of options to pay off your loan. There are the most frequent: Standard Payment – pay each month Graduated Repayment – make reduced payments in the early years. Income-sensitive repayment – payments are a percentage of your monthly income. Extended repayment – get 25 years to repay the loan (if eligible).