10 Tips to Manage Your Student Loan
A college education is quite expensive in the US. To help young Americans get a college degree, the federal government and other private institutions offer student loans. You may apply for a federal government student loan or a private loan. Remember that you must pay back the amount you spent. Here are ten tips to Borrow as little as possible to make it easy for you to pay back your debt.
- Apply for a minimal amount
Student loans can help you achieve your goal of having a college diploma. However, you have to pay it back with interest once you have a job after graduating. Applying for an amount that is enough for your schooling would help you borrow less, which means you can pay it quickly. You can have a part-time job while you study so that you would have something to spend on your other needs.
- Make a definite plan
The reason why you take a student loan is to pay for your college education. Plan out on how you would pay for your tuition and other needs. Consider spending what you borrowed on tuition fees, books, and board and lodging while earning extra for your other expenses. Avoid using your loan amount to buy things that are not essential.
- Create a budget for the future
Most successful people do not spend beyond their budgets. Making both ends meet needs self-discipline. Estimate your monthly income and expenses when you already have a job. Include the amount that you must pay for your student loan so that you would have an idea how much is left after making the deduction.
- Know the type of your loan
Student loans can be extended by the federal government or by a private entity. Federal government student loans come from the administration. The interest is low, and when you cannot pay immediately after graduation, the government will take care of the annual percentage rate or APR. You can seek loan forgiveness by working for a government or non-government organization.
Borrowing from a private entity could mean more stringent rules. Payment must start on the date specified. Even if you do not have a job yet after graduation, you must pay the charges for your balances
- Know the people that manage your loan
The federal government assigns student loan servicers. Their services include keeping you updated with information about your loan, answer your questions, and manage your payments. Know your servicer by visiting the National Students Loan Data Systems or NSLDS.
- Create an online account
An online account will make it easy for you to reach out to your loan servicer if you have questions. That person can give you the latest information regarding your student loan. Make sure to keep your online account always current.
- Make an early payment
Even if you are still a student, making small payments if you can will help reduce the sum you must allocate for your debt in the future. Every time you earn extra money, set aside an amount for loan payment. Instead of going to the cinema and having coffee in an expensive coffee shop, use the money to make advance payments. After you graduate and start earning, you will realize how your sacrifices can make a difference.
- Know your repayment options
When you have a student loan from the federal government, you will have several repayment options. You can choose the standard repayment plan where you will have fix payments in 10 years payment. Another option is the graduated payment plan, where you start paying small amounts that gradually increase until you have paid off your loan. If your credit has a balance of more than $30,000, you can take the extended repayment plan.
Other options are the pay as you earn and revised pay as you earn repayment plan, income repayment plan, income-contingent repayment plan, and income-sensitive repayment plan. Since you have several options, you can choose the plan which suits your situation best and income.
- Repayment is easy if you have a small loan
You can reduce your debt by making small payments while you are still a student. Once you are earning an income, you can pay more every month to shorten the repayment period. You will most likely be debt-free after paying for a few years.
- Keep connected
Continue getting in touch with your servicers when you are making payments. You might qualify for reduced interests and other benefits. If your situation changes and you cannot afford to continue paying, let your servicer know immediately.
Consider these tips so that you would never have a hard time repaying your student loan. Always keep in touch with your servicer if you lose your job, or you got sick and cannot pay on time. A student loan must not be a burden you have to carry for years; it must be an instrument that you can use to improve your situation in life.