If you are ready to graduate, you can now face the reality of how much you borrowed to attend school. If you took private student loans, in addition to federal student loans, you may be in even more difficult situations.
There are strategies you can employ to reduce your monthly payment, but you will have to pay off the loans for an even longer period of time. It is important to be as proactive as possible.
You may not be able to afford a lavish lifestyle for a few more years while working to pay for your degree. It is important to note that to qualify for payments based on income and loan forgiveness programs, you must consolidate your loan into a Good Finance Loan. Your student loans can hurt your finances, and it’s important to get rid of them as quickly as possible
There are several options available when it comes to repaying your federal student loans. The federal government has just released revenue-based return options that allow you to reduce your monthly payment based on your current income.
It will adjust as you adjust your income, and after making payments for a period of twenty-five years you can receive the remaining amount of your loan forgiven. The Pay As You Earn program is similar but offers even more help for your loans.
Another option is to consolidate your federal loans and extend the time you have to repay the loan.
The consolidation option will reduce your monthly payment, but you will pay more interest over the life of your loan. This option can make it easier to manage your current financial situation, especially if you do not qualify for income-based student loans. You also lock in interest with student loan consolidation.
If you want to qualify for a credit recovery program, you must consolidate into a Good Finance Loan. Consolidation can lock in the current rate and prevent students from raising interest rates.
Additionally, you can work with your lender if you have a hard time finding a job or if you lose your job. The federal government will allow you to defer payments if you lose your job or if you face a difficult financial situation.
You need to document your situation and turn around proof of your situation. You cannot simply stop paying, you must call and request a deferral and complete the qualification application.
Private student loans
Private study loans have a higher interest rate and will not be as flexible in changing the number of payments or allowing them to skip payments. Interest rates are much higher on private student loans. You must pay for this as soon as possible as a priority.
If your payment amounts are too much, even with a reduced federal student loan payment, you might consider consolidating your private student loans to extend the time it takes to pay off the loan. When consolidating a private student loan, try to lock in interest instead of using a variable interest rate.
The shorter the loan term, the less you pay in interest, so try to make a manageable payment, but pay as much as possible.
Financial advisory services
Your current financial aid office offers exit counseling to help you make a plan to pay off your student loans. You can visit a financial advisor to help you create a budget for faster student loan repayments.
However, it is important to understand that most credit counseling sites work primarily with consumer debt rather than student loan debt. Bankruptcy rarely pays off student loan debt. You need to work fast to reduce your debt to start investing and eventually buying a home.
When you get your first job, you need to create a budget that allows you to put some extra money into whatever debt you have. Your private student loans need to be paid off before you start putting extra money into your federal student loans.
If you have accumulated a large amount of student loan debt, you may need to continue living the student lifestyle until you have reduced the amount you currently owe. The amount you make when you graduate will determine how much you will need to reduce your current lifestyle.