A Guide to Paying Off Your Student Loans
A Guide to Paying Off Your Student Loans Faster
We all know that earning a college diploma is only half the battle. Paying off student loans you have racked up during your college years is an entirely different matter. It is important for you to start paying them as soon as you start working and earning your keep. Taking control of your finances early on will help you avoid late payment fees and more importantly, safeguard your credit score. At this point, you are in the process of establishing your credit rating, so it is important for you to stay on top of your finances and student loans.
Looking at the huge amount of student loans you have to pay off may be staggering at first glance. But don’t let this discourage you from making an effort to chip away at the amount, bit by bit. Here are a few tips on how to manage your student loans:
Know how much you actually owe:
Automatically, lenders will notify you of your required monthly payments. These mail notifications will come from student loan services such as Nelnet, Great Lakes, Navient (Sallie Mae), and FedLoan Servicing, among others. These companies serve as the middleman between the lender and the student borrower.
However, you can directly contact your lender or visit the Department of Education’s National Student Loan Data System in order to access your information and know how much you actually owe. Make a list of all the student loans you have, along with the lenders’ information, the outstanding balance, and the interest rates.
Know your repayment options:
Usually, the maximum time you are allowed to pay off a federal student loan is 10 years. However, you do have the option to extend this deadline if it is more than you can handle. If you are barely breaking even with your current job, then you may qualify for the income-based repayment scheme, where payment plans will be capped to only a certain percentage of your salary. Remember, though, that the longer time you spend paying for the loan, you will end up paying more for the interest. So, having a low monthly payment is something you should consider only as a last resort.
Private loans, on the other hand, do not qualify for the federal government’s income-based repayment plans. As such, it is advisable to prioritize variable private loans first over fixed-rate government loans. If possible, pay more than the required amount for your private loans and then pay the minimum amount on your government loans, since the latter’s interest rates will not increase, unlike the former.
It is also to your advantage if you are working for the public sector or a nonprofit organization, where you may qualify for loan forgiveness, but only if you have paid for your student loans for the last 10 years.
Once you start earning money, it might be hard to steer part of your income towards eliminating educational debt. The smart thing to do here is to pay it off as soon as possible. Otherwise, you might end up paying for it in over couple decades. By that time, you should be starting to save up for retirement, and not paying for student loans.
Look into consolidating your loans:
You can always consolidate your multiple federal loans into one single monthly payment. How a consolidated federal loan calculates interest? It takes the average rate of all the loans you’re combining, so it’s possible that you will not save money on interest payments.
Consolidation will often lower your monthly payments and you have couple of choices to repay your student loans. The best reasons why you may consolidate your student loans are that you pay a reduced number of bills monthly and track payments easier.
Get timely sound advice from Assisting America. We are more than happy to help educate you how you can consolidate your student loans into one easier and lower monthly payment.
Tags: Student loan, student loan payment
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