If you have completed college this year, congratulations!
In addition, your first student loan payment is due. (Cue sad trumpet.)
If you have borrowed federal student loans to cover your tuition fees, you will receive a grace period of six months from Uncle Sam before requesting you to pay.
If you mind (I know it's not), you're not the only one who owes anything. Outstanding student loan liabilities for the second quarter of 2019 were $ 1.48 trillion New York Federal Reserve,
It's easy enough to feel overwhelmed – you just graduated, started the first job (hopefully), moved from your parents' home to your own (maybe).
Apart from the obvious benefit of getting out of debt, on-time student loan payments will be good for your situation Credit scorethat will follow you for a long time after your memories of living in the dorm have faded.
Ready to tackle this student loan debt? Good, let's start.
A Guide to Repaying Student Loans
When you're ready to repay your student loans, it's best to make a plan to avoid wasting time, money and energy. You must do the following before you make the first payment.
1. Know how much you owe and who you owe
If you are like most graduates, you have taken several student loans during your multi-year college career. According to an Experian report from 2017, the average borrower has 3.7 student loans.
So get started with the organization by finding out who you owe, how much you owe, and when it's due. Oh, and the interest rate is also important. Do you need help to find out everything? Then read this article that explains how to find out How much do you owe to student loans?,
2. Pay off your interest before your grace period expires
If you have cash, you must pay at least the accrued interest on your federal student loans before the grace period has expired. It can save you a bundle of money by helping you to avoid it interest capitalization – If the interest is offset against your principal amount and you receive interest on the total amount.
Wondering where to find extra money before the deadline? Consider taking a picture page bustle make extra money to throw it in the direction of paying.
3. Think of a plan … a repayment plan
Did not you get that six-figure job – or maybe a job? Instead of poking your head in the sand and avoiding student loans, you need to ask for help. That means you fall on one income-dependent repayment plan,
These plans typically cover your monthly payment between 10% and 20% of your disposable income. Contact the loan service provider to find out which plans you can qualify for.
4th Remember forgiveness
Maybe you can do yours Student loans awarded, But it's not easy or fast … or likely (keyword for the second sad trumpet).
But if you work in certain areas – like Teaching or Maintenance- – You could be eligible for lending after a set number of years. There are usually many problems to overcome. It also means making sure that your loan repayment program and your employer meet the requirements for your forgiveness program.
5. Avoid late payments and arrears
Do you remember the part I told you not to put your head in the sand? That's why: If you miss your payment up to a day, your federal loan is in default. If you have not received payments for your Federal Family Education Loan (FFEL) or a direct student loan for 270 days, your loan will be deemed to be in default.
If you can not afford your monthly payment due to unemployment or a recognized economic emergency, you may be entitled to Deferment or Forbearance, You can also qualify for a moratorium if you are enrolled in an approved graduate scholarship program.
During the deferral, you do not have to make any monthly payments on your federal loans, and your subsidized loans will not generate interest (the remainder will be due).
A high or good credit score will allow you to qualify for better credit and credit cards with lower interest rates and more favorable terms. A bad credit score may not even qualify you for a loan.
If you do not qualify for a deferment, the other option is forbearance. During this time, you can stop making payments or cut your monthly payments for up to a year. However, during forbearance, interest continues to accumulate on all your loans.
Both options are only temporary corrections, and in the end you will probably owe more money. But at least you will not jeopardize your creditworthiness.
6. Consider life after college (and student loans)
It can be difficult to overlook this debt, but it is important for your financial future to remember that there is more to life than just student loans.
First, if you put every available dollar in your student loan, you might feel like you're making progress in that area, do not sacrifice your current financial position by plundering yours emergency funds (You have one, right?). This will allow you to cover the unexpected expenses – for example, a new set of tires or an unexpected vet bill – without having a credit card debt.
In addition, you should not sacrifice your future for today's debt. Instead of paying every dollar for student loans, you're now saving for your retirement. In the next few years you will be able to do that build an impressive nest egg Future for which you will thank.
Bonus: waste your money in one 401 (k) or IRA reduces your taxable income. So, if you choose an income-based repayment plan, the federal government will not count the money you save on retirement.
Cue the big brass band. You deserve it.
Tiffany Wendeln Connors is author and editor of The Penny Hoarder. Read her bio and other work here, then she starts on Twitter @TiffanyWendeln.
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