Student loans can seem complex, both for the person taking out the loan and the financial institution that is making the investment. Before the paperwork is signed and the terms agreed to, it is crucial that both sides understand exactly what the student loans entail.
Whether a person is just starting school or just about to graduate, understanding the finer points of the student loans will help make repayment an easier process in the future. This will benefit both the individual with the loan and the bank looking to make its money back.
Here are a few important things to know about student loans:
- How much is actually owed: The most important piece of information will be exactly how much is owed to the financial institution. As long as that number is known by the person with the loan, they will be able to make the correct payments back on time.
- The meaning of forbearance: Forbearance allows the person with the loan to stop making payments for up to 12 months. Although the interest still accrues, the payments can be stopped for a number of different reasons, including professional internships or national service.
- What deferment means: A deferment is when a pause is put on repayment for a specific period of time. The circumstances under which this can be done include unemployment, military service, returning to college or getting a scholarship. The specifics of this will depend entirely on the loan agreement.
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