Need Help With Repaying Your Student Loan? Check Out The Following Tips
You are right to feel good about finally graduating. However, you should not forget that its also time for you to start thinking about repaying your student loan. When it relates to federal loans which constitute a great proportion of student loan debt, there exists as a general rule a grace of six months period after you graduate. That gives you as borrower the time to find your footing before you are ready to begin the repayment of loans.
A survey conducted by Experian showed that seven out of ten seniors graduate from schools with debt and they owe on an average of about $34,000. For about 63% of the families, the graduates are reportedly saddled with the sole responsibility for repaying the college tab.
Thus, if you are worried about how best to handle the bills and what steps you need to take, then take note of the following vital tips.
1. Know every relevant thing about your loans
A lot of borrowers have diverse loans and each of these loans potentially has various interest rates, repayment period and the due date for repayment monthly. Keeping all that in mind can be quite confusing. As such, a report indicated that 56% of the respondents which constitutes majority said they have no idea about the interest rate accruing to the student loans and also 59% responded that they have no idea what the particular repayment term is.
According to a Sallie Mae’ spokesman, Antoine Oakley, with regards to the repayment of loans, starting right is quite critical.
Cap: It is quite critical to start repaying your loans the right way
You can visit the central database of the Education Department which is dedicated to student aid so you can understand the existing terms of your own federal student loan. If yours is private loans, then contact your lender to make inquiries about particulars you are not clear about. There are also some sites that can offer you a dashboard model overview.
2. Keep Your Contact Details Up To Date
It’s possible that you have relocated, gone on a long trip and have new contact details. Ensure that each of your lenders are updated so they can be able to reach you. According to Student loan Hero’s Jousweit, it is quite easy for your loan provider to lose your details.
Cap: Keep your lenders updated with your details so they can find it easy to reach you
3. Ensure to constantly keep tabs on cash flow
To calculate cash flow, you subtract your expenses from your income and that includes your monthly loan repayment and your rent. That will help you know if it’s possible for you to afford the loan payments. According to Oakley, knowing that can help you make informed decisions. For instance, it helps you to know whether you can afford to purchase a car or if you’ll be needing to get a roommate.
Cap: Constantly checking how your cash flows will make it easier fr you to make informed decisions
If at the moment you have no job and your own cash flow is in the negative, then you should consider a forbearance or a deferment.
A forbearance allows you to suspend your payments for as high as one year temporarily. On the other hand, deferment gives room for suspending the loan for a maximum of three years.
4. Consider Registering For Autopay
Where you are able to afford the payments, then consider signing up for automatic payment. This automatically decreases the chances that you’ll miss making any payment. It also comes with the added advantage of a moderate deduction of an interest rate on your student loan. According to Oakley, it could also help in building a relatively good credit history.
Cap: Signing up for automatic payment helps you reduce the chances of missing making any payment
5. Check to know if employers are able to chip in
Reports indicate that more employers are beginning to offer benefits of student loan repayment to the employees and such benefits can help these recent graduates with their debt repayment.
The results of a survey indicate that just 4% of the employer in the US offer advantages of student loan repayment. That is an increase from 3% in 2017. It is, however, anticipated that the number will continue to increase.
6. Consider refinancing or consolidating
As soon as you get a steady source of income and also credit history, then you should reach out to some lenders or schedule a meeting with a financial adviser to discuss the options available to you. In a case where you have diverse student loans to pay back, then you should put consolidating into consideration.
In the alternative, there might be a lower interest rate for refinancing. Also, Josuweit advised that you could also elect for extension of terms beyond the default ten years and that would help reduce the monthly payments. However, he advised that you should weigh the available options.
For instance, refinancing or consolidating private loans will mean you will no longer benefit from the safety nets of federal loans and that includes repayment programs that are income based and also loan forgiveness for people who qualify. Also, an extension of the loan term means you’ll end up paying higher interest on the balance.
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