Student loan repayment can make or break your financial well-being, but a little guidance can make the process much simpler. Here are six things everyone should keep in mind when they’re entering the re-payment period of their loans.
Understand Your Loan Terms
Before you start making payments, it’s important to understand the types of loans you have. Federal loans, private loans, subsidized loans, and unsubsidized loans each have their own terms, interest rates, and repayment options. Review your loan documentation so you’re familiar with the details—understanding this will allow you to make an informed decision about your repayment strategy.
Know Your Grace Period
Most federal student loans have a grace period, which is usually six months after you graduate, leave school, or drop below half-time enrollment. During this period, you are not obligated to pay, though many loans might still accrue interest. Yet this is still considered a golden opportunity to take a beat and recalibrate your approach. Make the most of this time by getting your finances in order and making preparations for the upcoming repayment period.
Compare Pros and Cons of Plans
Fortunately, many student loans offer some flexibility in how you pay them back. The standard repayment plan has fixed monthly payments for 10 years, but income-driven repayment plans vary your monthly payments based on your income, which can be helpful if you’re early in your career. Look into the plans available, and choose the one that fits your budget best.
Look Into Forgiveness Programs
You might be eligible for loan forgiveness programs if you work in a public service role or for qualifying non-profit organizations. The Public Service Loan Forgiveness (PSLF) program, for example, forgives the balance of your direct loans after you’ve made 120 qualifying payments working full-time for a qualifying employer. Check out these programs to see if you qualify; it’s not necessarily likely for the average person, but it’s still worth doing a cursory internet search to see what help is available to you.
Make Payments on Time
Just like a credit card, you want to pay your student loans on time if you don’t want late fees and dings to your credit score. Set yourself up for success with reminders for the deadlines for your payments, and think about signing up for automatic payments or use your budgeting apps to keep track. If you’re struggling to make payments, reach out to your loan servicer as soon as you can to explore potential options like deferment. However, if you can make payments, consider adding a little extra to help your future self with interest.
Don’t Be Afraid To Ask For Help
Dealing with student loans can be complicated, but you don’t have to do this alone, nor do you have to have all the answers right away. There are many resources out there to help you, from financial planners to online support groups. The most important thing is not to shy away from seeking help from professionals or talking to your peers who are facing similar challenges.
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