Here’s how paying off your student loans can be a little less painless
Paying back your student loans can be a pain in the you know what. Here are a few tips to help ease the process along and help you prosper in the end.
Deduct the interest you pay - You can get a tax break on all that interest you pay – up to $2,500 a year.
Know any benefits you get from your job – If you’re teaching at an inner city school you could end up getting up to $5,000 taken off the amount you owe to you Stafford Loans. You don’t have to pay more than you have to so do some homework before you start paying your loans.
Consolidate! – When it comes to student loans, it is wise to put all your loans in one big loan, as opposed to credit cards where it isn’t considered very prudent to do the same. If you consolidate your loans, you end up being covered if rates go up. However, if rates go down you could end up paying more because of the locked in rate you have. You can ask your lender what is the best option for you.
You need to be aware of your repayment options. – To do this, you need to know exactly how much you owe on your loans. You can check this at the United States Department of Education’s National Student Loan Data System. Once you get the final number, you can talk to your lender about payment options an pick the one that fits the best in with your financial goals.
Know how much you will have to pay each month. – So you’re finally out of college and have that diploma in hand. Right now, in your deferment period, you might not know how much you’re going to end up owing per month, but you should. Interest will cost you more than the amount you borrowed, but paying the loan off faster will help offset some of that cost. If you pay the minimum amount each month, then you’re going to end up being a lot less wealthy in the long run. Then again, if you pay the minimum and put the difference you would have paid in a savings plan with a higher interest rate than your loans, you could end up ahead when you pay off the loan.
You can ask to have your interest rate lowered. – Ask and sometimes, you will receive. This works with some loans and credit cards; if you ask for a lower interest rate, sometimes lenders feel generous and give it to you. It never hurts to ask.
If you can avoid it, don’t ever file for bankruptcy. - Declaring bankruptcy may be able to get you out of credit card debt and past due bills, but it won’t get you out of student loan debt.
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This *is* good advice. Student loans are low interest rates and credit cards should be avoided at all costs. I know of some students who invest all their loan in bonds and high interest accounts at the beginning of term to get a maximum return (and here in the UK there is something called a premium bond where you can win cash prizes from the government and still take out all your cash risk free) – if people look around there are ways to stretch the loan out.
Student loans are one debt that you just can’t avoid no matter how bad your situation gets. I think the best tip in this article is to call your student loan companies and ask for help. If you are struggling to make your payments then let them know about it and they will often do something for you like giving you another deferment period, lowering your rate or offering you interest only payments. Be sure to use this only if you are struggling as it will delay you getting your loans paid off.
Good advice. No doubt that in most cases a student loan will be the best value loan you ever get. In Australia there are discounts if you pay off big chunks at once which can be worth doing when you can afford it.
In Malaysia the government gives a loan to students for higher education institution. If you finish your studies with an excellence result, the government will change that loan to a scholarship which means it’s free.
That’s cool Ahmad, I wish we had more programs like that here in the states. I know that my mom got a lot of help with her MD from the Canadian government which helped pay for most of her medical tuition.
I had a friend graduate here last year as a nurse and her bills for 4 years topped 50-60k.
I agree with your statement that “paying back your student loans can be a pain.” Right now, I am a 5th year senior in college. My advisor notified me I would graduate in about 2.5 years. There is no way! I already owe about 32K in loans, and I’m fixing to quit college, proceed to LPN school and work. I’m sick of it! It’s not easy, like you said.
To help the situation many lenders develop aid programs to help with student loan debt. These programs may have stringent requirements. But meeting them may make you eligible for student loan forgiveness.