Manage a Lot of College Student Loan Debt Repayments
Whether you are just starting a college or just graduated from one, thinking about and making plans for how to pay off student loans on time is a good step in achieving financial freedom. To become a debt free is not easy, but it is not hard either if you take time to follow some simple steps to make repayments. Many people have gone to college and taken out considerable amount of loans, then eventually paid all of them back successfully.
How to Manage Paying off Lots of College Student Loans?
1. Consider loans carefully: Before you even apply for any student loans, you have to know what type, how much and why you need them to start with. Having a lot of student loans can make repayments difficult. Don’t get any student loan if you don’t really need it if you can somehow manage to pay for college with other alternatives. Such situations include getting scholarships, family members willing to pay for college, your employers pay for further education, saving money here and there from your paycheck, paying college tuition in small installments, or a combination of them all. Also see if you can control or minimize your expenses to carrying out a debt.
2. Compare loans before applying: There are many types of student loans. Most common one is applies through FAFSA, which offers two types of loans: subsidized and unsubsidized. The subsidized loans don’t accrue interest while you are going to college and until 6 months after the graduation. On the other hand, unsubsidized loan will continue to accrue interest as soon as it is disbursed to you or the school of your choice; so it will take longer to become debt free if you go this route.
3. Get loans enough to pay for college: Don’t get student loans more than you really need. If you can live with minimum student loan amount, do that. Unlike grants and scholarships, college loans need to be paid back. Therefore, if you have lots of college loans, you will have a hard time paying off on time. One good strategy is to use multiple sources to pool enough money to pay for college, as opposed to using loans. This money is to finance your education, not your lifestyle.
4. Best student loan interest rates: Each student loan comes with different interest rates. For example, one might be at 6% APR while another one just 2.5% interest. There is also some differences with each since some companies offer the choice between going with Fixed Rate or the Variable Rate. Fixed Rate means the interest rate that you sign up for at the time will remain the same throughout your loan period. Whereas, Variable Interest Rate will change depending on loan markets. If you get a low interest rate, then be sure to lock it in.
5. Know your options with the loans: Once you get the college loan, know whether you can make early payments without any fees and penalty. Find if your lenders provide options for automated repayments so you don’t fall behind payments. Some lenders offer interest rate deduction when borrowers make their repayments automated; this is because lenders get to save cost on sending and opening invoices. Most of the times borrowers pay interest rates before even the repayments begin to keep the balances low.
6. Student loan Grace period and Deferments: Grace period is when even after graduation, your loan won’t collect any interest rates. This period is usually about 6 months. Loan deferment is when your repayment is deferred once you continue with your college education. You stop paying your college loans until you finish your school.
7. Public Service Loan forgiveness program. This program is available for professions in teaching for at risk students and military service to pay off the loan balances after making 120 monthly payments. Only catch is you have to employed full time in public service and won’t benefit until year 2017.
8. Prioritize loan repayments: Once you are ready to make payments, order the priority based on loan’s interest rates. Among lots of student loans you have, pay the minimum amount for the one with lowest interest rates. Try paying off the loan with the highest interest rates as soon as possible while making other payments on time.
9. Consolidate to manage lot of college loans: If having many loans from various lenders making it harder for you to manage them all, consolidation is the best choice for you because it will lower payments. But it will also mean the loan period will be extended and thus you will be eventually paying more interest in the long term. It will put all the small loans into a larger chunk but with a single lender. These companies often offer range of flexible repayment plans that can work best for you.