While the media goes gaga over the things that have gone wrong with the student loan debt, my advice would be to take the road less traveled, and concentrate on what can go right. You are proficient enough to have a significant impact on your financial status, simply by withdrawing your focus away from media, and putting it on your existing loans and their repayment options.
Let me discuss 13 tips that can prove beneficial in managing your student loan debt –
Overlooking your student loan
Yes, the fact cannot be denied that it’s not a child’s play to pay back the student loans. Ideally, these loans should not be ignored no matter what the scenario is, or else it can lead to serious consequences in both your credit rating and fiscal future. You have to ensure that you start paying them as soon as you finish your college.
Knowing your total loan
Take the case of any debt situation, the first thing that is required is to understand how much you actually owe? Generally, students complete their graduation with multiple loans, both private and federal sponsored, having arranged for fresh financing every year while they were doing their schooling. So, gear up and do the math: Only when you are aware of your total debt, you are able to prepare a charter to pay it off or choose to consolidate it.
Know the loan terms
When you are done with summing up your debt size, break down the term of your loan. The interest rates and repayment guidelines may vary with each loan. You will be needing this information in order to frame a payback plan that nullifies penalties, extra interest, and fees. You can also explore the online website of The Department of Education where you can find the best repayment plans.
Make the most of the grace period
– As you assemble all the specifics, you will come to know that each loan is accompanied by a grace period (it is the time period that you have after completion of your graduation to pay off your loans back). These too can vary.
Go for consolidation
– Once, you are equipped with the details, you might want to take into consideration the option of consolidating your loans. The best part of student loan debt settlement is that, often, it eases the burden of making monthly payments. Consolidating your loans lead to easy management of your debt as you only need to remember a single, less monthly payment for your loans. But, it will also increase your loan period, which means that you will have to pay more in the long-run. What’s more, the rate of interest on the consolidated loan will be more as compared to your existing loans. It is imperative that you are familiar with the loan terms and conditions before you sign up for the consolidation.
Paying off the principal
– Another way through which you can payoff your debt is making the payment for the extra principal (borrowed amount). The faster you payoff the principal, the less interest you will have to pay for your loan. Since the interest gets calculated on the basis of the principal every month, less principal will mean less interest payment.
Having a fixed budget
– Once you get familiar with what actually you have to pay, make sure that you draft a monthly budget and adhere to it. While making your budget, you should trim down all the unnecessary expenses to have that money towards your debt. You should look for the ways through which you can save money so you get to budget more towards your debt repayment.
Try earning more money
– Well, I know it is too much to ask, but trust me it is one of the effective ways to deal with the student loans. Following are some of the ways through which you can increase your income –
- You can do overtime and extra shifts.
- You can choose to start a small business based on your interests.
- You can sell unwanted belongings that you might be having.
- Apply for the jobs offering higher salary packages.
- You can use your passion to earn money such as blogging, freelance writing, or teaching.
Defer payments
– If you are not working somewhere, ask your lender to defer payments. In case you have taken a federal student loan and you qualify for the deferment, the federal government may make the payment for the interest for the deferment period. If you don’t qualify, you can ask your lender for forbearance. This allows you to temporarily stop making payments for a certain period of time.
Know more about loan forgiveness
– You can also be eligible for loan forgiveness but only in some extreme situations. There are certain criteria for this – if your school was closed before you get to finish your degree, you become permanently disabled, or paying the debt will make you bankrupt.
Pay automatically
– Some of the student loan lenders offer a discount on the interest rate if you give your consent for the payments to be withdrawn from your account on a monthly basis automatically. If you are a part of Federal Direct Student Loan Program, you can have this sort of break.
Take expert’s advice
– Majority of the people offering student loan guidance don’t even have complete knowledge themselves and neither they have worked in the student loan industry. So, make sure you take time out to search for a specialist with ample experience in offering student loan and financial service industry. Student loan debt is an important part of your fiscal landscape, so finding an expert with patience and knowledge will be the key.
Choosing your payment plan
– When you seek the advice of an expert, they will be able to guide you about making a choice for a better payment plan like Pay-As-You-Earn or Income-based repayment. If you are having a tough time managing multiple loans at once, student loan consolidation can be another option for you.
It won’t be wrong to term student loans as ‘beastly’, so make your best efforts to avoid these loans. I recommend following the above-discussed tips and make sure that you take expert guidance in this matter.
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