Student Loan Repayment Tips
Read these 6 Student Loan Repayment Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Student Loan tips and hundreds of other topics.
Let's Forgive and Forget
Forgiveness is a virtue, and there is no one that students want to be more forgiving than the people controlling their student loans. For some people this may actually be possible.
Jobs that focus on public interests in low-income or inner city communities pay less, require longer hours and provide more stress. Yet they are attracting more young college graduates now than ever before.
Student loan debts can be forgiven, meaning partially paid off or canceled completely, when students commit to work in such an environment for a set period of time. The average time commitment is one or two years for partial forgiveness or three to five years for complete loan forgiveness.
These fields are typically government or public service oriented, like teaching, health care or legal practices. Depending on the field and the area a student works in, loans can be forgiven by the government, school or company the student agrees to work for. The goal of programs like this is to get more people interested in public service work and reward them by reducing their debt through student loan forgiveness.
Check to see if the school you attend has a program like this, or if they can recommend employers who forgive loans in exchange for your service.
Size Really Does Matter
Minimum payments are just that: Minimum. If you can afford to make larger payments it can save you a lot of money in interest. Making larger payments will get your loan paid off much faster than going with the barebones amount. The faster you pay off the principal loan, the less interest you will accrue and have to pay off too.
If you find yourself strapped for cash one month, sending in the minimum amount is fine. You do not have to pay the same every month. Some months you might be able to pay 25 percent more, and others you might only be able to afford 10 percent. Anything extra that you can pay the lender each month will make a difference, no matter what the amount.
By doing this and reducing the amount of debt you have, it makes things in the future like getting a mortgage for a house much easier. You might even be able to get a great deal on a mortgage through the same lender as your student loans. Take this into account when you enter student loan repayment.
The Price You Pay
The price you pay for defaulting on a student loan is a steep one. Simply put, it is not worth it. Failing to pay your student loans can severely impact your credit rating, damage that of your co-signer's if you used one, and put a lot of other things in jeopardy.
Some loans require collateral, meaning that these things can be taken as payment on a defaulted loan. Houses, cars, and other types of personal property would be at risk. The good news is that paying your loans on time can do just as much good for you as not paying them can do harm.
Strengthening your credit, building a good reputation with your banks, and not having your car towed are all a lot of fun. The benefits to be had from paying off your student loan debt is too great to risk the price of defaulting.
Make Sure Your Budget Doesn't Just Leave You With Ramen
You will find that different lenders will offer different types of repayment plans for your undergraduate loans. The best way to make a smooth transition from being a college student with a few bills to being a graduate with a lot more is to map everything out.
Figure out what your income is going to be and what living expenses you will have to pay every month. This includes rent, utility bills, phone, etc. Once you have accounted for all the necessities, you will be able to determine how much you can afford in student loan payments.
Now take that figure and look at the repayment plans offered by your lender. Find the one that will work best for you. If none of them are an ideal fit, talk to the bank or provider. See if there is an arrangement that can be worked out for you. There are usually adjustments that can be made, but people are not aware of them because they are afraid to ask.
Asking cannot hurt a thing, so you might as well try. This can mean the difference between living comfortably and surviving on Ramen noodles for three years.
Build Good Credit and a Future At the Same Time
Another very important reason for building and maintaining good credit is that it makes consolidation much easier. With a good credit score you can get approved for a consolidation loan with a lower interest rate, potentially saving you thousands in the future.
This will also have benefits extending far into your future. Building good credit now will help to reduce your student loan debt and make you more likely to get approved for home loans, auto financing and other situations you will encounter. Any step you take to make the repayment process on undergraduate loans smoother will affect multiple aspects of your daily life for decades to come.
So start making your future easier in the present.
Maintaining a good credit history throughout your time in college is beneficial for a number of reasons. For instance, good credit will make it easier to get approved for a loan later in your college career if you run into financially tight times. Now you can avoid having to take time off from school to earn money so you can go back.
Tuition Reimbursement
Tuition reimbursement sounds like music to the ears. Those two words can bring a smile to the face of anyone who paid their way through college. The company you worked part-time for while in school might even do this.
Many employers will reimburse the tuition of employees if they pursue degrees in specific fields and maintain good grades. This is different from student loan forgiveness, which is dependent on the student working in a public service capacity in low-income areas for a certain amount of time.
With this type of program, your employer pays your tuition or a portion of it each semester as you maintain good grades. This is a great solution for anyone struggling to pay for school. Ask your boss if your company has a reimbursement program. You'd be surprised how many employers are offering alternatives like this now.
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