How to Pay Off Student Loans
Time to Start Paying Off Your Loan
Once you are out of college it becomes your responsibility to start paying on your educational student loans. The bills will start coming in the mail and depending on how many loans you agreed to you might be making payments on more than one loan at a time. You have several options to consider when finding money for your loans: consolidate your loans into one clump payment, look into forbearance or other types of loan deferment, or diligently pay until you are paid off.
Consolidating Your Loans
Consider if you need to consolidate before you sign up.
- How manageable are your payments?
- What kind of
interest rates are you paying on your loans?
- How long do you want to keep paying on your student loan?
- How many payments to you have reaming on your
If you answers to these questions included high interest rates that are out of control then you should consider putting your loans together into one payment that will be easy to manage. The downside of doing this is that in most situations you will draw out the life of your loan. The longer you are paying on your loan the more you will be repaying. The advantage is you can reduce your payment to make them more manageable and only have one bill show up in the mail instead of several.
Calculate out what you owe.
Determine what kind of loan you have, the interest rate, the payment amount(s), and for how long you will be paying. For many people finding money to spend on their student loan becomes a last priority. A college education does not always promise a high paying job. The average college graduate will come away with over $20,000 worth of debt. Monthly payments of $200 over 10 years can be hard to swing.
Forbearance and Loan Deferment
If you are having troubles
putting money towards your debt contact your loan organization immediately. You
might be eligible to defer your loan and make the payments later once you become
more financially stable. Or you might be eligible for forbearance if you are
not eligible to defer your loan. Either way you need to apply to be eligible to
for any relief.
Talk to a Professional
Talk to a financial aid counselor at the university. Most colleges offer free financial aid advice with information about the types of loans:
- Parent Loans (Stafford and Perkins)
- Private Student Loans (PLUS)
- Consolidation Loans.
A financial aid counselor at the school or a loan officer at a bank will help you understand what status your loan is in:
- or in-school.
The best way to become debt free is to make your monthly payments and if possible pay more on the loan each month than the minimum amount due. If you can pay more than the minimum each month you will see your loan go down very quickly. The average student loan takes around 10 years to pay off. You can half that if you pay twice what is due each month. For most people this just isn’t possible, especially those who continue on to higher education like graduate school.
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