Borrowing money for education is a must for many, but after you graduate it may seem overwhelming to pay your loans off as you start out in your career. Managing student loan debt is much easier if you can follow in the footsteps of other borrowers like you who are trying to make ends meet.
Stay Connected to Debt
While it may be tempting to ignore a looming deadline, it is important to keep an eye on your outstanding loans and time limits. Many student loans have specific requirements for when you have to start paying them back, and even one missed or late payment can negatively impact your credit. This is something you want to avoid as you are getting into the world where credit matters for everything: mortgages, job opportunities, renting apartments, and buying cars. Along those same lines, avoid using credit cards for things you can’t afford, since the interest rates are typically pretty high.
Image via Flickr by Sebastian Kippe
With mobile devices so readily available, you can easily use technology to manage your debt. There are hundreds of financial management apps that make it easy to consolidate all accounts into one place, so you can check in regularly and see how you are doing on your budget and loan repayment. Specific banks and credit cards also have their own apps for simplified account management. With all of the apps readily available on innovative 4G LTE capable phones like the Samsung Galaxy S5, you can stay on top of due dates and outstanding loans.
Consider Repayment Alternatives
When you took out your first student loan, you probably had no idea what your starting salary would be in your new career. As a result, your repayment schedule might not be feasible once you have finished school and secured a job. Instead of missing payments or falling behind, talk to your lender. If you have federal loans, it may be harder to change the payment schedule, but it’s worth looking into if the monthly amount is impossible to pay. There are options for income-driven repayment plans that can alleviate the stress over making your payment each month.
Understand Postponement or Deferral Options
If you become ill or injured and are unable to work, there are ways to postpone or defer payments on your student loans. If this is your only choice, talk to your lender before making a decision since you may still accrue interest during this period. If possible, pay at least the interest while you aren’t working since this can decrease the overall amount owed once you are back to your job.
Make Extra Payments
Remember when you used to live on ramen noodles and frozen pizzas in college? It may be time to get back into the habit of living as frugally as possible so that you can make extra payments on your student loans. Anything you can put toward the debt will lower the principal and save interest. If you have multiple loans, pay off those with the highest interest rates first. You might also consider consolidating loans so you can make one payment each month without negatively impacting your credit.
Look Into Loan Forgiveness
If your career path has taken you into the world of non-profit, government, or other similar public service jobs, you might qualify for federal loan forgiveness programs. Even those working in education and healthcare can qualify if they meet criteria. These programs can help reduce or even forgive the amount you owe, depending on your position and employer.
Get in Good Habits
Even during the grace period after you finish school, get in the habit of setting aside your loan payment amount and pay it as a lump sum on the first due date. This will help you establish a budget with that amount coming out each month, so you won’t feel overwhelmed after the grace period ends.
Education is well worth the investment, since it can dramatically increase your earning potential over the course of your life. If you take out loans for school, prepare early for their repayment.