Often, students develop a habit of “manana habbit” attitude towards financial obligations. We seem to not care about making payments to our student loans. Keep in mind Student loans is different from any other loans out there. Student loans accumulate large percentage on a daily basis if not paid in time.
It’s important to make at least the minimum payments.
SO WHAT IS THE SECRET TO PAYING OF THOUSANDS OF DOLLARS OF STUDENT LOANS DEBT?
Avoid accumulating interests.
The best practice to do this is to communicate with the student loan officer. Give them a call and explain to them your job situation. 100% of the time you can get an extension of non-payment without interest. This is a mandatory action on the bank’s part instructed by the government finance department.
Most student loans come with a grace period of six months in which you are not required to make any payments. If your grace period is coming to a close, then you have some decisions to make.
The first step is to find out how much do you owe and to whom?
Your financial aid officer can help you with this. So don’t waste any time and contact your financial aid officer.
According to the US (United States) government’s Student Aid website: During the grace period on a subsidized loan, you don’t need to pay any principal without accumulating interest. While in an unsubsidized loan, you don’t have to pay any principal, but it will charge interest. You can either pay the interest or be capitalized, which adds it to the balance of the principal loan. This will be a bad scenario as it will drastically increase the amount you owe and potentially burry you in debt for years to come.
HOW TO MAKE YOUR STUDENT LOAN GO AWAY?
Believe it or not, there’s actually a few ways that they can be diminished without you paying them, but they are special cases. Most of us are going to pay back every dollars and cents we borrowed. Plus more!
HOW DO I MAKE MY STUDENT LOAN WITHOUT PAYING?
Otherwise, your student loans will remain in your financial history until you pay them back. Not bankruptcy can destroy them.
WHAT IS LOAN CONSOLIDATION?
It’s basically a way to lower your total monthly payment, but it comes with a price. How? Consolidating your loan will extending the terms of your loan and therefore paying more interest in the long run.
If you can afford paying your monthly payment, you still should consider consolidation. Why? Because you can always stick to your standard repayment if you can comfortably afford it. This lowers you interest in the long run as interest is calculated per month on the principal balance.
HOW DO I CONSOLIDATE MY LOAN?
From the day you graduate, your mailbox will be filled with offers to consolidate your student loans. Why does it seem like everyone wants to help you? Because student loans are backed by the US government. It means that if default on my loan, the government will pay it and try to recoup the money from me themselves.
Keep in mind if you consolidate during your grace period, you can lock in your interest rate to around 0.6% lower and still not make any repayments until the period ends. So dont wait!
WHICH LENDER IS RIGHT FOR ME?
Consider that interest rate for all lenders will most likely be the same. You can get discounts for setting up an auto-payment through their website and for enabling payments using a credit card. The advantage of using a credit card is you can earn points and rewards with your credit card company.
SO WHAT HAPPENS WHEN I CAN’T AFFORD PAYMENTS?
We all go through tough times so lenders are prepared for this. If you are unable to pay your monthly bill, it’s not the end of the road. Talk to your lender and don’t feel bad about it. They are there to serve your needs.
Ask to arrange a payment plan, where you pay less now and pay more later. This helps when you are just starting out in a new job. And as your salary increases, you should naturally be able to make higher payments.Also, ask about deferment of the principal balance. This means you are not required to make payments for a set period of time but interest will still accrue.
The good thing about this is your credit score will not be affected.