Student loans are necessary expense for many students. The questions of how students and their families are paying for college is a growing national concern. While these issues (and more) are sorted out, here are some smart ways students can start paying off their loans.
- How to Find College Scholarships
- Paying For College: Beyond Tuition Costs
- Choosing Between 2 Year and 4 Year Colleges
- Understanding Student Loan Forgiveness Programs
A Head Start
A 2013 study found that, on average, students were graduating from their first four years of college with around $29,400 in loan debt. For careers that require even more education, you can expect to go even further into the red.To get a good hold on their educational debt situation, students need to be prepared.
Students can get a clear understanding of what kind of totals they’ll be seeing by using a loan calculator. Saving and scanning copies of every loan they sign is also important and a good way to keep track of variable interest rates on private loans.
Investing in a file cabin or scanning hardware to maintain careful records is a must. With some forward thinking, students will have a clear understanding of what’s ahead. That helps them when the time comes to start paying off these loans.
In speaking with my husband, he wishes he would have used money earned during college to begin loan payments while he had the funds available. Once he graduated, he no longer had those funds. His bills absorbed his paychecks for some time and even minimum loan payments were hard to afford. Needless to say like many others our age, we are still paying off loans and likely will be for some time.
Take A Closer Look
A well thought out loan repayment strategy is more than a technique for avoiding financial headaches; it can also save you money. Consider using an online service or software program to get a good handle on your loans.
With linked accounts, visual representations and even the ability to show students different methods of repayment, a program like Tuition.io is worth consideration. Students who have only taken out federal loans can monitor their amounts and payments with the U.S. Department of Education’s National Student Loan Data System (NSLDS).
All students (and their parents) should be wary of certain student debt relief services. Be careful of companies who scam students looking for some respite from overwhelming loan payments with promises of consolidation or a year without payments. If the loans are federal, they can only be consolidated through the federal government.
Pay It Back
For federal loans, and for some private loans, students are given a ‘grace period’ of six months before their first payment is due. While it’s tempting to put off payments, if possible, students shouldn’t wait for this grace period to end before making the first payment. The sooner payments are made, the less interest can be incurred.
Students who are able should also think about making payments every week, as opposed to every month or every two weeks. Doing so will lower the interest paid overall. Setting up a method for auto withdrawal (removing money directly from the account) can also mean up to a .25 percent interest rate cut. Talk to your loan servicer or financial advisor about setting up an account for repayments.
If a loan payment is more than your income, you might qualify for income-based repayment (IBR). These plans are based on disposable income and are typically paced out across longer periods of time.
There are resources available to help if you have issues paying back your student loan. Get free advice by calling 877-827-3868.
Taking out and repaying student loans can seem daunting, but trust that a college degree is still worth the price. With accumulated savings, clever spending and making the right choices for the time spent on campus, a college degree is a great investment in the future of students and their families.
Preparing for college is so much more than ACT scores and admission essays. For more advice on navigating financials or saving for higher ed, click here for friendly advice from our friends at CommunityAmerica Credit Union. This post was written by Savin’ Maven Dana Gering.