(WHAS11) -- Millions of college students hope congress can strike a deal by the end of the week to avoid a rate hike on some federally subsidized loans. No matter what happens Washington, there are some basic tips any borrower can keep in mind.
Navigating student loans can be complicated, confusing and even crippling especially for soon-to-be college freshmen, and their parents.
Eric Bell of the personal finance website YoBucko.com says one major rule applies to both government or private loans, and that's reading the fine print. “You need to understand the terms of those loans. You need to understand the grace periods, how long it takes between the time you graduate and until you actually have to start repaying that debt. And so don't forget that those loans do accumulate interest, and those are loans. You have an obligation to repay those,” said Bell.
Bell recommends thinking ahead to life after graduation. Will salaries in your chosen field put you on track to pay back what you've borrowed, quickly? For those who've just graduated, create a budget that includes those loan payments. Paying on time now, may pay off later.
“Taking out student loans, it might seem like it's a bad thing, but it does help you build a strong credit history. If you pay those loans back on time, you can get lower interest rates in the future, by building a stronger credit history”, explained Bell.
If you're having trouble, don't be afraid to ask your lender for help. You might be surprised at how much the lender is willing to work with you. Defaulting on student loans can derail a financial future.
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