Most people who attend college rely on financial aid, such as student loans. In fact, if it wasn’t for student loans, many wouldn’t be able to get a college education. Unlike grants, you have to repay a student loan after graduation. There is a six-month grace period with federal loans, in which student loan repayment doesn’t begin until six months after graduation.
The length of time it takes to pay off a student loan depends on multiple factors, such as the amount and your financial circumstances. A 10-year repayment term is typical for student loans under $30,000, but if you owe more than $30,000, most lenders extend repayment to 25 years.
Understandably, most people don’t want to deal with student loan debt after graduation. If you plan ahead and make wise financial moves, such as saving your money and finding the best interest rates on credit cards, you can meet this expense with ease.
1. Save your money.
As a college student, you may not work full-time or have a lot of money. Still, saving should be a priority. Aim to save at least 10% of your paycheck or allowance and build a financial cushion. This can help you settle into life after graduation, and with money in the bank, you can pay down your student loan balance faster.
2. Make payments while in school.
Federal loans do not require a payment while in school. But if you have disposable income, make periodic payments to help knock down your balance. A lower balance reduces how much you pay in interest and how much you owe after graduation.
3. Free up cash.
If applying for a credit card, make a list of best credit cards and only apply for those with a low interest rate – preferably under 10%. Getting a low rate reduces how much you pay in interest each month, which can free up cash for more important things, such as repaying your student loan debt. With extra cash in your pocket you can increase your college loan payments.
4. Consolidate your student loan.
If you’re juggling multiple student loans, consolidate all your outstanding debts into one loan. Consolidation typically results in a lower interest rate, which can lower your monthly student loan payment and save you money.
5. Choose a graduated student loan program.
This repayment program helps you pay off your student loan debt faster. Your payments start off low, but increase every two years. This plan works if you anticipate a higher salary in the near future, plus future raises.
Student loan debt doesn’t have to hang over your head forever. Be smart with saving, make wise financial decisions and you can pay off your debt sooner.