Making it Easy to Pay Off Your Student Loan Debt

Student Loan Payments - What to Do When You're Struggling to Pay Off Your Debt

Making all of your student loan payments on time is one of the most difficult things that many new independents have to make...In fact, many times paying off student loans can be the first time in a young person's life that they undergo any REAL financial stress.

Ah, student loans…Isn’t it funny how our view of college as a culture has changed over the past 50 years? I mean, things are supposed to change, but wow.

Now, I don’t wanna sound like an old fart, but it used to be that you only went to college if you needed the education for a prestigious profession, such as law or medical careers. It was both normal and acceptable to just go to school through grade 12, not go to college, not go to undergraduate school or graduate school, not make huge student loans, and then go on with your life in whatever job you wanted.

However, in recent years, the high school diploma has lost it’s power, and now you’re the odd ball if you DON’T go to college. Crazy, right?

I mean think about it…education has become so important to our culture that people thrust themselves willingly into deep financial debt that can affect them for the rest of their lives…They spend way more than their budget or income should allow them to, and all so that they can say they graduated from college. It’s an expectation!

Of course you’re local lender isn’t complaining…and neither is the government, as they’re racking in quite the fortune on federal student loans.

But I digress, I got off on a little rant there…Sorry!

Student loans are a very legitimate way to make it through college once you’ve given the whole scholarship route a try…If you’ve just graduated high school, but you can’t quite afford to go to college from the scholarships (or other financial aid) you got, but you’re really wanting to get all of your education done ASAP, then it’s probably worth it to consider a loan. You can either do Federal or private loans, and they each have their own merits.

However, I’m not here to give you definitions of the different types of loans. I’m assuming you already know what a subsidized stafford loan is…you know that you can get loans specifically for undergraduate school and you know that you can get loans for graduate or professional school…you know you have to be enrolled at least half time to qualify for any student loans…

I’m assuming we’re on the same page here…

What I want to talk to you about today is a few tips that you can follow to make sure that you’re making all of your student loan payments successfully!

How Can I Make Sure I’m Paying Off My Loan?

First - Document you’re loans, and make sure that you are very careful when planning out your finances. You should be able to know a month in advance whether or not you’re going to have trouble making the next payment, and you should know what sort of budget cuts you’ll need to make in your daily life to allow you to afford that monthly payment.

Also, make sure that you keep an active log of every single loan that you have out. Keep note of your lender, the balance of the loan. Make sure you also have written down you’re repayment plan that you and your lender came up with…That way you’ll never forget what you’ve agreed to do. You also might look around for a good loan payment calculator, these little things can make planning out your finances much easier.

Second - Make sure that you know how long until you HAVE to start making payments! Most federal student loan programs have a “grace period” of around 6 months. Private loans tend to be much shorter though, so if you’ve made a private loan then you should make sure that you’re very clear on how long you can wait before you have to pay back the money that you borrowed. Also make sure that you’re familiar with interest rates, and that if you’ve gotten a loan with a fixed interest that you know what it is and how much it’s going to end up costing you (assuming you make your payments on time).

Third - Take some time to think about how you want to structure your repayment plan. The standard way that most lenders want you to make your student loan payments is through a 10 year plan. Basically you make loans for undergraduate school, or you make loans for graduate/professional school, and then you have your grace period (whatever that may be) and then you start to pay off the loan evenly over the course of 10 years.

However, you can extend your repayment plan. If you do this, be careful! I recommend that you do your best to calculate the amount of interest you’ll pay in advance. More often than not extending your loan will be a much worse deal and much more stressful than just trying to make ends meet for a few years, the interest rate on student loans is often enough to be crippling.

If you’re looking for an alternative to the standard 10 year monthly payment plan, then I suggest you look for a loan program that offers an income-based repayment plan. The way this works is that the lender will give you the loan, and then when you’re ready to pay it back you’ll be required to pay a fair percentage of your income each month. The nice thing about these is that it’s possible to have all of your debt forgiven after 10 years if you’ve made payments consistently. It’s definitely something to look into.

Fourth - Communicate with whoever you borrowed money from! Trying to repay loans can be stressful, and even though it’s intimidating to talk to your lender, you should definitely do it anytime you’re having problems. It’s their job to make your loan repayment as smooth and easy as possible. A good way to get into trouble is to NOT tell your lender when you move…If you ever make it difficult for your lender to find you then chances are that you’ll end up paying for it straight out of your bank account, and you don’t want that to happen.

Well, that about wraps up everything that I’ve got to say about student loan payments…I hope that you’ve found these 4 tips to be pretty helpful. When it comes down to it, if you just make a point to use common sense, and to spend your money intelligently, then you shouldn’t have any trouble with paying off your loan.

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