After graduating from college, your mind will shift to the next phase- that is, finding a job. But besides that, there is another crucial thing that is paying your student loans. Paying student loans have become a challenge for most students. According to the College Board, about 60% of college students graduate while they still owe college loans. Therefore, you are not the only one.
Also, I am a beneficiary of the college loans, and I used to ask myself whether the loans were worth it, but yes, they are. So, avoid procrastinating and start paying the loans right away. Therefore, I have come up with our guide that will help you sort your financial messes.
Top 7 Steps for Managing Your Student Loans
1. Know the type of loan you’re getting
Before applying for any loan, you as a student should keep track of your loans. Check the lender and repayment status of your loans. If you are not sure about these, then a visit to your lender of StudentLoans.gov will help. Log in to your account and check the loan details for your account. The site has a list of your federal loans, including the amount, lender, and repayment status. For non-private loans, visit your lender.
2. Ask about Interest and APR
It’s always vital to know about the interest and APR of the loan you’re borrowing. The interest is the principal and the cost of borrowing it. APR refers to other costs that come with borrowing money. The Federal Lending act dictates that every lender must indicate the APR and nominal interest before issuing the loan to a student. Check this with your employer.
3. Let your lender know if you have a change of circumstances
After checking your options, you should now set the first date for paying your loan. After graduating, there is usually a grace period you are allowed before you first pay the loan. If the time is not enough, then you can defer or forbear time until when you’re ready. Now, pay right away when you are comfortable to do so.
4. Know your grace periods
Each loan has a grace period and depending on the type of loan. You will get a rest period before you start paying the mortgage. During this period, don’t ignore the debt or indulge in unnecessary luxuries. Instead, take your time to understand the loan and come up with a game plan that includes paying the loan in small amounts. That way, if you start paying earlier, then you will hardly delay your loan payment, which could affect your credit score.
5. Make sure you cover repayments on time
During your grace period, you were sending your resume, CV? Right? And you probably have been at internships too. A job will enable you to repay your loans on time and is, therefore, important to get one. Well, let’s hope that you made a good impression on a particular employer and they have decided to hire you. Its good news, right? Yes, you will be so anxious to get a salary. But also notify the employer to deduct some money from your pay for settling the loan.
6. Choose the best debt repayment plan
Also, apart from your student loans, another common loan that accrues is that of your credit card. Never ignore it as it too can accrue interest of up to thousands of dollars. So while you are dealing with the loans, come up with the best strategy of paying them.
7. Stick to a Budget
The moment you earn the first salary, you should draft a monthly budget plan and adhere to it. Your first budget is going to be simple, and its, therefore, best not to include any unnecessary items. At this time, you should prioritize the saving of money for paying your student debts.
Usually, the general thumb rule is to bring home about 30% of the salary to pay debts. Besides, it does not hurt to be left with decent pay and live an average college student.
Student loans are beneficial to most students in their college studies, but once they graduate, then paying them off can be tough. Coupled with the harsh economic crisis and fewer jobs in the market, it’s common for students to default on loans. However, with our guide, you can prepare well to deal with student loans once you are out of school.