There is no doubt that student loan debt can be tough to deal with for many people.
However, if you do not make a plan to deal with it in the best way possible, you could find yourself becoming financially burdened for years to come – and potentially throughout your entire life.
To go some way towards helping to address this problem, the following blog post is all about giving you a few top tips that can help you to manage your student loan debt more effectively.
Work Out Your Total Debt
Your first step should be to work out how much you owe in total. As students often graduate with multiple loans, it may be the case that you have to do some fact-finding and adding together to work out how much you owe in total.
The only way that you are going to be able to develop a plan that addresses your debt situation adequately is by knowing exactly how much you owe in the first place, so write a list of all the loans you have and the outstanding balances on them.
Understand the Terms of Your Loans
As well as knowing the actual bottom-line figure of the total amount owed, you also need to understand the terms of your loans in more detail. As well as finding yourself with different interest rates to juggle, you may also find that there are varying repayment rules.
You will need to channel all of this information into a plan that covers how you are going to pay back the loan. Otherwise, you could find yourself with a high level of interest, repayment fees, penalties etc.
Be Prepared to Ask for Help
When the burden of student loans becomes too much, many people try to deal with it on their own and do not talk to anyone else about it. However, this is never going to be the most effective strategy to employ.
There may come a time in which you need to ask for support, so check out student loan resolution services if these are required. Essentially, you should try to get support at the earliest possible opportunity to avoid your debt running out of control.
Tackle Your Higher Interest Loans First
Some loans are going to come with a higher interest rate than others, and these are the ones that need to be tackled in the first instance as these are the ones that can quickly spiral if you are not careful. Of course, you still need to make the minimum required payments on the other loans, but any extra cash can be channeled towards the loan with the highest interest rate.
Once you have paid this one-off, you can then move onto the one with the next highest interest rate and so on. This is a common strategy that many people use, and one that can prove to be highly effective at the same time.
Automate Your Payments
One of the main advantages of automating your repayments is that it takes the worry of having to remember to pay out of your hands. Also, some student loan providers offer a reduced income rate if you do this as the company receives a guaranteed payment rather than continually having to chase this up. Even if the reduced rate is only limited, it all adds up over time.
Check Out Alternative Repayment Plans
Even if you do not plan on implementing a different repayment plan yet, it is still worth knowing about your different options, just in case you need any of them in the future. For example, you can sometimes get a graduated repayment plan that allows for low payments early on and expects more as you progress through life and hopefully move up to higher salaries.
There is also the possibility of an extended repayment scheme in which you stretch out the loan over a longer period—for example, 25 years rather than the standard 10. An income-contingent repayment scheme is another option, which calculates your adjusted gross income (AGI).
Also, there is the pay as you earn scheme which can be a tough one to qualify for, but once you have made it, can be a gentler loan to pay back. Bear in mind that if you take on a different loan plan, you will need to continue paying your loan (and the income directly related to it) for a longer period.
Defer Your Payments
In some situations, you may need to ask to defer your repayments for a set period. This often happens when you are not currently employed and can be a useful way of giving yourself the breathing room that can prove to be so invaluable.
other valuable tips:
If you are not able to qualify for a deferment, another option is to ask the lender for forbearance, which means that you stop paying the loan back for a temporary period. Any interest that you accumulate within this time frame will then be added onto the overall principle of the loan.
Look at Loan Forgiveness
In more extreme situations, you may need to look into loan forgiveness, which essentially means that your student loan will be cancelled or discharged entirely. There are a few different reasons that could qualify you for this such as the school closing before you completed your degree, you have become permanently disabled, or that paying back the loan will result in you going bankrupt.
Managing your student loan debt is a tough but necessary part of life. Getting on top of your financial situation is one of the best ways of ensuring that you can make all of the monthly repayments. It also helps to know your other options if you are unable to pay back the loan for any reason.
Preparing yourself properly now can help to prevent issues occurring in the future. After all, there is no harm in doing some research and knowing about all the different options that are available to you should you need them.
Image Credit: managing your student loan debt by envato.com
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