It’s not something any graduate would look forward to, but unpleasant as it is, it’s a task that has to be done. Repaying a student loan is a daunting and uphill task, especially if you don’t have a job lined up and are unsure of how to go about the process in the most efficient way. If you’re not shrewd and determined to pay back the money you borrowed at the earliest, you’re bound to face a lifetime of debt that keeps adding up because of the interest.
Of course, the repayment decision is that much easier if you’ve been sensible when applying for the loan and locked in your rates or settled for a Federal loan which has a much lower interest rate than loans from alternative or private lenders. If you’re a fresh graduate looking at insurmountable odds as you try to repay your loan, here are some pointers to guide you through the process:
• Use your six-month grace period after leaving school to search for a job that will support you as you make your repayments.
• Once you secure a job, set aside a large portion of the money you make so you can pay back a larger amount each month when you start repayment in six months’ time. Just because you have six months at your disposal, there’s no need to be frivolous with your money.
• If you’ve borrowed from several lenders, make an organized list that will help you plan how much you owe each one every month, and when the amount is due.
• Pay back the entire amount due every month even if you do not receive a bill or alternative intimation.
• Make sure you understand the terms of your loans; check with your lenders if you’re unsure.
• If you’re struggling to make monthly payments, look at loan consolidation as an option. Remember though, that by consolidating your loan, you’re going to be paying a smaller amount every month over a longer period of time. This effectively means that you’re going to be paying a much higher sum (because of the interest) than before, and that the repayment period is going to take many years more.
• If you have a mix of Federal and private loans, consolidate the Federal ones first. They usually come at lower interest rates and more favorable terms and will thus save you money in the long run.
• Talk to a loan counselor before you begin to consolidate your private loans.
• If you’re consolidating your loans within six months of graduating, remember that you forfeit the grace period and are supposed to start payments within 90 days of consolidation.
• Take lender fees and finance charges into account before you consolidate at lower interest rates.
• Once you find your feet and begin earning more, step up the payment amounts even though you’ve reached an agreement where you can pay a low figure each month. The more you pay, the more you save on interest paid and the faster you can get this debt written off your balance sheets.
• Make sure you inform your lender of any change in address, temporary or permanent.
• In extreme case, if you’re unable to pay back your loan, see if you qualify for a loan forgiveness program.
This article is contributed by Sarah Scrafford, who regularly writes on the topic of top accredited online university. She invites your questions and writing job opportunities at her personal email address: sarah.scrafford25@gmail.com.
