Here are some
tips that can save students headaches and money, whether they’ve just finished
school or are already paying off student loans.
Get to know your loans Do you have
federal or private loans? What are your interest rates? It's important that you
keep track of the loan type, lender, balance and repayment status for each of
your student loans. These details determine your options for loan repayment. If
you’re not sure what kind of loans you have, visit the National Loan Data
System at www.nslds.ed.gov to see
federal loans, or contact your school.
When is
the first payment due? Different loans have different grace periods (how
long you can wait after leaving school before making the first
payment). For federal PLUS loans, it depends on when they were issued. The
grace periods for private student loans vary, so consult your paperwork or
contact your lender to find out. Don't miss your first payment, and if you can,
begin paying your loans early, if you want to start reducing your balance
before the interest kicks in.
Put
yourself on a budget
Live within your means by prioritizing expenses and spending only what you can
afford. Document monthly income and living expenses. Make sure
you have enough income to cover “needs” before “wants.”
Consider
setting up automatic payments. Missing payments can quickly get you into financial trouble.
Pay on time all the time. Setting up payments automatically through your bank
account will dramatically reduce the chances of missing a payment.
Don’t increase
payment period if possible Interest charges can add up quickly. If possible, pay off your loans
within the standard 10-year period. Repayment programs that defer or lower
payments will reduce your monthly payment, but you will pay over a longer
period of time and your balance will be larger.
Pay off
loans with the highest interest rates first You won't get penalized for paying off a student loan
early. Consider using extra cash to pay down loans with the highest interest
rates first. This strategy can save you big dollars in interest.
Explore
your repayment options If you are having trouble making loan payments, make sure
you understand your repayment options. Deferment and forbearance temporarily
stop payments, but interest continues to accrue and the loan balance continues
to grow. Several repayment programs are available for federal
loans. Programs for private loans can vary by lender. Loan consolidation
is an option, but be sure it’s the right option because you can only
consolidate one time. And never consolidate federal loans into a private loan.
1 comments:
Great tips! I'm working on paying off my student loans and can't wait until they are gone.
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