Five Tips for Paying Student Loans
You’ve graduated and you’re ready to take on the world. But what do you do about the college loan debt you’ve accumulated over the past four years? Depending on your financial situation and future plans, there are several options to make repaying student loans more manageable. Check out these five tips for paying student loans to help you combat the debt and reduce the amount of student loan interest you could owe.
1. Create a budget and automate payments: The most important thing you can do to repay your private student loans is to create a budget and stick to it. Set up automatic payments from online banking so that paying your student loan takes priority over other expenses. If you have a good month or get a bonus or raise, dedicate those funds to paying off the principal of the loan.
2. Defer college loans: If you’re planning to go on to graduate school, you have the ability to defer paying your student loans until after you receive your degree. Keep in mind you may need to borrow more to cover the cost of your continued education, so try to set aside savings each month in order to pay back your loans when you are done with school.
3. Join a program that agrees to pay your debts for you: Programs such as Teach for America and AmeriCorps offer tuition or loan reimbursement if you complete a set period of time with them. Usually these jobs have a lower salary and focus on cities in need, but if it’s something you’re passionate about, it can be good experience and provide coverage for your college loans. It is also possible to find employers who are willing to reimburse some or all of your loans. These may be harder to find, but it’s a question worth asking.
4. Consolidate debt: When it comes to federal loans, consolidating debt could get you a lower student loan interest rate, more reasonable payment schedule, or simpler repayment process. Talk to your loan administrator to determine how long it will currently take you to pay back your debt and discuss various consolidation options. Be sure to take your student loan interest rates and repayment schedule into account when you consolidate. Keep in mind that while you can consolidate multiple federal or multiple private student loans, you cannot consolidate federal and private debt together.
5. Enroll in an Income Based Repayment (IBR) plan: IBR can help make paying your Federal student loans more manageable. It reduces your monthly college loan payments by capping them at a percentage of your discretionary income. If you’re wondering how that works out, discretionary income is defined as your adjusted gross income minus 1.5 times the poverty rate for your family size. Plus, if you make on-time payments for 25 years, at that point any remaining college loan debt from federal loans is canceled.
Find a lender who will walk you through your student loan repayment
When you’re paying off your student loans, it’s a good idea to regularly communicate with your lender. Openly discuss whether you are having issues with repayment or if your income situation has changed. They can only help if they are informed. Depending on your original college loan agreement, you may be able to extend payments, thereby lowering your monthly payment, or consolidate for lower student loan interest rates.
Sponsored content was created and provided by RBS Citizens Financial Group.
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