With so many providers offering variations of school loans, you can easily end up with several, and it can seem a little overwhelming when it comes time to pay them back. Here are some tips to keeping your budget on track when it comes to your school loans.
- Become an expert on your loans. How much do you owe? What is your interest rate? How many loans do you have? Who is your provider, and how does their website work?
- Communicate with your lender, even when money’s tight. Providers would much rather hear from you now than track you down with questions later. Give them a call and keep them informed.
- Consider before consolidating. Consolidation is not always the best option; you’ll want to do your research. Most providers offer fixed or variable rates. Fixed rates stay the same through the life of the loan, whereas variable rates change and fluctuate from very low to very high. Find out what’s best for your financial situation before consolidating.
- Use the snowball method. If you have multiple loans, put extra money toward the lowest balance first while making minimum payments on the rest; then, when you pay off that balance, start applying those extra dollars toward the next lowest. You’d be surprised how quickly you start knocking out loans!
- Find alternative financing options. Planning to go back to school? Try to pay cash rather than taking on more loans. You might also look into scholarships, grants, or company incentives.
- Make your student loans a priority. All student loan debt should be a part of your monthly budget. Remember, the longer you pay the loan, the more interest you accrue, resulting in a higher overall balance.
- Think carefully about how you repay. Income-based repayment plans often saves your money now, but you’re still being charged interest for the entire loan balance. You may be paying $150 a month with the income-based plan, but you’re accruing $495 in interest each month. You’ll never get ahead!
- Pay off early if you can. Most service providers will allow you to pay off loans early without penalty.
- Think long-term. Student loans do affect your credit and your ability to purchase a house.
- Keep up on your loans. Student loans are serious. Don’t avoid your payments!
Creating a budget that includes your student loans can help with long-term repayment. Learn how to budget here.
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