Getting approved for student loans sometimes feels a lot easier than repaying them. After all, the approval process might only take a few days or weeks, while repaying your loans could take more than a decade before the balance is paid off.
This is why it’s important to get as educated as possible about your student loans no matter what stage you’re at in the repayment process. Our step-by-step guide will help you evaluate how well you’re doing with your student loans currently, as well as what you can do to improve the way you’re approaching your loans now and in the future.
Whether you have one student loan or multiple student loans, it’s important to have a clear picture of who your lenders are, what your current balance with each lender is, and the repayment status of each loan. Your most recent paperwork should give you a proper overview of your student loan situation, but for the most up-to-date information, you may have to log in to your lender’s payment portal or its online equivalent.
Once you’ve identified your existing lenders and balances, you’ll want to take a deeper look at a few important items, including each loan’s grace period, monthly payment amount and interest rate. This can help you discover what loans should be paid off first and how much you’ll be spending each month to keep all of your loans current.
Now that you have a handle on your student loan balances, payment amounts, interest rates and due dates, you’ll want to set up automatic payments on these accounts to ensure on-time payments each month. If automatic payments aren’t an option, setting up a personal payment calendar also works for many student loan borrowers.
When it comes to student loans, the more you pay towards your balances, the sooner your debt will be paid off. This is why so many student loan experts recommend paying down loans that have the highest balance and interest rates first, then moving on to your smaller loans – assuming you have more than one student loan.
Additionally, if you’re able to pay more than the expected amount each month, like an extra $100 for example, you’ll be reducing your loan’s principal amount to the tune of $1200 a year. But even if the amount is far less, it all adds up over time, and will help you pay off your debt more quickly.
It’s common for borrowers to feel like student loan payments are financially overwhelming, especially when you’re fresh out of college and embarking on a new career. If this sounds familiar, it may be time to look at some other options for repaying your student loans.
One of the best decisions you can make regarding your student loans is checking out income-driven repayment plans that base your monthly payment amount on your current income. These usually give you anywhere from 15-25 years to repay your loans, and may significantly lower your monthly payments due to the longer repayment timeframe. Otherwise you could be left with the Standard Repayment Plan most borrowers end up getting approved for, which requires you to pay back the entirety of your loan over a 10-year period.
Income-driven repayment plans include:
If you’re a borrower with multiple student loans, consolidating these loans into one loan might be a better fit for you. Between federal student loan consolidation and private student loan consolidation, you have two great options for combining two or more loans into a single loan and single monthly payment. By consolidating your student loans, you’ll often reduce the amount you pay each month, and extend the repayment period for up to 25 years.
Life has its ups and downs, so it’s not unusual for you to experience financial challenges from time to time while you’re repaying your student loans. If you’ve already missed a few payments, or you know you’re going to be experiencing a financial hardship in the near future, be sure to contact your lender to set up new repayment arrangements.
Most lenders will let you get caught up on your loans at a later date, make smaller payments, or use deferment or forbearance options before your student loans go into default. They may even have a student loan rehabilitation program that can be tailored to you specifically in some cases.
Every year, millions of borrowers overlook some great advantages offered through the U.S. Department of Education regarding their federal student loans. From loan forgiveness programs for teachers, U.S. armed forces members or veterans, public servants, nurses and first responders, there are plenty of valuable programs available that can either reduce or eliminate your student debt entirely after you’ve met a few requirements.
While the conditions for these programs might seem complex, our student loan experts can walk you through the process over the phone at (800) 771-6358 or after you fill out our online form. This way we can answer your questions, help you get started on the paperwork, and let you know the best route for you to take on repaying your student debt.