Pay Off Your College Debt
Getting a degree is a big boost for your career: Statistics show college grads earn more, on average, than others. But while it may feel like your college days flew by, those tuition bills can linger for decades. Here, a guide to help you gain control of your student loans and pay them off ASAP.
Start with a plan. If you’ve taken out more than one type of loan, it can be hard to keep track of the different interest rates and payment schedules. Take some time to sit down and look through your loans. Figure out the total amount you owe (don’t get scared—you don’t have to pay it all at once). Also look at the different payment schedules that are available. Call the loan issuer to discuss which payment plan would work best for you. Many student loans let you defer payments if you go on to grad school, can’t find a job, or have an unexpected financial crisis. You can also extend the life of the loan to reduce your monthly payments. Find a system that’s manageable and fits into your lifestyle.
Consider consolidation. Consolidating all of your loans into one can have advantages. You may get a lower fixed interest rate by doing so. And having all of your loans in one place might be easier to handle. However, depending on the type of loan you have, consolidation may not be an option. MarketWatch.com lists reasons to think twice before consolidating. Before making a decision, research carefully and ask your lenders about your options.
Make more than minimum payment. Once you have a plan and have decided whether or not consolidating is right for you, you’re ready to pay off those loans. Each month, if possible, try to pay more than the minimum amount required. By doing so, you’ll chip away at the principal amount and reduce the overall debt. If you have multiple loans, choose one account to focus your extra cash on. Pay off the loan completely, and then concentrate on another one. The faster you get rid of college debt, the sooner your income will be free for fun splurges.
Look for forgiveness. You may be able to reduce your student loans by getting involved in certain areas of work or volunteer programs. If you’re a teacher, for instance, and you take a job in a low-income area or a place that has a teacher shortage, you may qualify. Public service employees who meet certain criteria are also eligible. Read more about this option at the Federal Student Aid website.
Having to pay off student loans is not necessarily a bad thing; it means you have an education that will help you move up the corporate ladder fast. By understanding your options and finding a payment plan that works for you, you can put the loans behind you for good. Once you do, be sure to celebrate—you deserve it!