Repaying Personal Loans

When Federal financial aid isn't enough, personal loans are available to supplement student aid. If you've taken out a personal loan to help cover the costs of your online educational program, you may have a different set of rights and responsibilities.

Loan Counseling
Completing your online educational program can be an exciting and hectic time, and it's important to make sure your loan information doesn't get lost in the shuffle. Take advantage of free counseling through your lender, so you understand the details of your loan repayment. Make sure you won't be penalized for paying your loan off early, and ask about incentives for electronic and on-time payments.

Repayment Options
You may have a grace period of up to six months once you leave school or drop below half-time status before you need to start making payments on your loan. You may be eligible for a variety of repayment plans. Depending on your lender, you may be able to make graduated payments, which increase over time as you become more financially stable, or income-sensitive payments, which can go higher or lower based on your yearly salary. Each private lender may have slightly different repayment options. For specific repayment details, contact your lender.

Protecting Your Credit
Failure to make on-time monthly payments can result in your loan going into default, which can affect your credit for years. If you have a co-signer for your loan, they may be pursued for repayment, and the default will also show up on their credit report. If you're having trouble making your loan payments, be sure to contact your lender immediately to discuss deferment or forbearance options, which can temporarily postpone or reduce your monthly payments.

Prioritizing Your Payments
When it comes to paying off your debt, it's important to create a budget you can keep. Because personal loans generally have variable interest rates, you may decide to pay more money every month on personal loans than you do on your Federal student loans. For loans with high interest rates, you may want to contact your lender to discuss ways to accelerate repayment. If you have more than one personal loan, a debt consolidation program may also be available.

By creating a reasonable budget and exploring your repayment options, you can protect your credit and your financial future.