Student Loan Tips to Revisit/Reconsider

By Victoria Robertson on June 12, 2017

Paying off student loans is stressful, aggravating, and, at times, extremely confusing. What it comes down to is this: they’re far too important to forget about. You should be taking your student loans extremely seriously.

For this reason, it’s important to know as much about them as possible. You’ll need to know how to repay them, how to decrease your monthly payments, what happens when you return to school, and more.

So, to help you out a bit, here are five student loan tips to revisit and reconsider.

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1. Consolidate or refinance your loan

For many individuals, college costs you thousands of dollars in student loans. The higher the amount of money you borrowed, the higher your monthly payments will be. For some, this can mean nearly $1,000 a month just in loan payments. This isn’t very manageable for most people.

So, to combat these high monthly payments, you may want to look into consolidating or refinancing your student loans. In consolidating, you will be combining your multiple loans into one, meaning you will only need to make one, all-encompassing, monthly payment. By refinancing, you may be able to lower your interest rates and lower your monthly payments.

That being said, not everyone is able to do this, so don’t assume you’ll be able to do this when you need to. Get some information about your loan and learn about your consolidation or refinancing options.

2. Pay down the interest, even when you don’t have a monthly payment

Many students make the mistake of not paying anything towards their student loans until they absolutely have to. This is going to be detrimental to you in the long run. While you likely won’t be able to make hundreds of dollars worth of payments every month while in school, you should be at least throwing some money into your loan to combat your interest.

In case you weren’t aware, most student loans are accruing interest, even if you aren’t paying them yet. So what’s happening is the amount of money you’ve borrowed is slowly increasing for no reason other than you aren’t making any payments.

To avoid this, throw $25-50/month on the loan. That way, you’re paying down some of that interest so when it comes time to graduate, your rates aren’t worse than you started with.

3. You have a grace period

It’s also important to note that you don’t have to start paying your loan immediately upon graduation. In fact, most loan providers will grant you a six-month grace period in which you have time to obtain a job and get your finances in order before you need to begin your monthly loan payments.

You should still be paying off the interest at this point but definitely take advantage of this grace period. Set aside some money just in case you lose a job or something in the future (this way, you can still make your loan payments) and save what you can while you can.

This is the only grace period you’ll get, so definitely take advantage of it.

4. You can change your payment plan

You aren’t necessarily locked into your monthly payment plan. After a certain amount of on-time, monthly payments, you may be eligible to switch to an income-based repayment plan. Through this plan, you’ll only be required to pay a certain percentage of your salary, not a fixed monthly rate.

For some, this is extremely helpful, as it typically decreases your monthly payment. Plus, no matter what your salary, you know exactly what percentage you’ll have to pay to your loans. There may also be other repayment options available to you, so definitely look into that when you get the opportunity, as it may save you some major money!

5. Avoid (or effectively manage) forbearance/deferment

There are options to you if you are unable to pay your loan: forbearance and deferment. If you defer on your loan (i.e. you’re returning to graduate school), you should remember to keep paying down your interest. Also, keep in mind there’s typically a limit as to how long you can defer your loan, so make sure your plans don’t exceed that length of time.

In terms of forbearance, you typically use this if you have some sort of shorter-term emergency. For example, if you lose your job, you can go into forbearance (in extreme cases) for up to a year normally (length will depend on your loan).

But again, if you go into forbearance/deferment, be sure that it’s your last resort or that you’re still able to pay down your interest rates in the meantime. These are options available to you, but shouldn’t be taken lightly.

What it comes down to is this: your loans are extremely important and they need to be taken extremely seriously. Any additional information you can gather on your loan will be helpful to you in the long run. So be sure that you’re utilizing these tips, and any others you come across, and your loan doesn’t have to be the end of the world. Instead, it can be a manageable payment that, before long, you’ll be able to pay off and forget about completely!

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