How to Start Paying Your Student Loans
Paying student loans is one issue that bothers most people, both during their time in school and when they are done. Student loans may be accounted for as good debt while in school, but once you’re outside, it becomes like every other loan – it has to be paid.
A student loan in America is considered an economic crisis, and it’s not difficult to see why. The average student loan per graduate from recent years stands at around $40,000. Having so much debt that can take a lot of years to pay up constitutes a financial burden on most young people.
This is why learning how to pay your student loans is of utmost importance. Here are a few ways to gain an edge when paying your student loans off.
- Choose your repayment plan: While everybody is automatically assigned the standard 10-year repayment plan, you have a variety of options to choose from when determining what loan plan suits you best. You can decide to go for one that’s based on a percentage of your discretionary income if you’re not sure of a steady paycheck.
Other options also include loans that run for 20-25 years or have a loan forgiveness option. It really depends on what you want.
- Start early: The best piece of advice when it comes to paying student loans is that you should start as early as you can, even before graduating. While you’re not usually required to make payments while in school, you can always get a side job to help you clear up some of the debt. This will help you reduce how much interest you’ll have to pay eventually, especially on loans where the interests are piling up.
There’s also a grace period of 6 months after graduation when you’re not immediately required to make payments. You can use the money earned during this time to bring down your principal and, in turn, your overall payment.
- Consider consolidating and refinancing: Consolidating and refinancing are probably the most helpful options when dealing with huge loans with high interest rates. Consolidation is especially helpful when you have multiple loans. It’s a simple process that combines all your loans into one with a fixed interest rate. This makes it much easier to monitor and manage your loans.
For refinancing, a lender pays off your debt from your previous lender and offers you a new loan with new terms. The goal of refinancing is often to get a better deal, either in terms of the interest rate or the timing of the loan.
The best part is you can get both from an education loan finance company near you.
As you’re setting out to start paying your student loans, taking note of the tips above will be crucial to helping you do it successfully. Remember to avoid defaulting on your payments at all costs. It can negatively influence your credit and have other severe consequences on your finances. In any instance where you can’t afford repayments, contact your service provider to review your options.