Students loans are commonly associated with frustration, stress, and massive debts. The first thing you should know is that you are not alone since student loan debt is a phenomenon that is a national crisis.
According to the Institute for College Access and Success, America is now facing one of the most striking student loan debt crisis in its history, with borrowers owing an average of $28,650 after they graduate.
Here at Gradehacker, we help college students just like you in a variety of areas such as with coursework and exams. From our years of experience, we know firsthand how students struggle with financially managing to go to college. Many students feel like the majority of their budget goes to paying off student loans.
So, how are you supposed to enjoy your adult life and lead that lifestyle you dreamed if you are struggling financially?
To start living the life you always wanted, you must pay your debt first. And yes! This is possible. Simply, you have to know how to pay your debt, and you must do it smartly.
Consider these steps on how to pay your student loan debt and get out of that gloomy financial crisis!
Knowing ALL Your Loans Will Avoid You Many Future Headaches
You may think this sounds crazy, but many students take out loans without knowing the full picture. Commonly, borrowers aren’t fully aware of all the loans they have taken until after graduation.
So, what can you do?
First, identify your lender.
If you have a federal loan, you should be able to find it in the National Student Loan Data System. Here you can check and confirm all the information regarding your federal loan.
In the case you have a private loan, you should be able to contact your lender directly if you have any inquiries or doubts, or you can check your credit report for that information.
By doing this, you will know all your outstanding loans and services, so you can organize yourself and find that specific loan information.
Additionally, you can get a free credit report in the Annual Credit Report website to double check that information.
Choose What Payment Options Suit You Best
Alright, now you know your loans, and know how much money you have to pay. This is the moment where you decide how you will pay your loans.
Know that there are many payment options.
You can switch your loan to an income-based plan, and you’ll be paying about 15% of your discretionary income.
There are also other payment plans, such the Pay-As-You-Earn and Income – Contingent Repayment plans.
You should know the interest rate of each loan you take and evaluate which payment options offer you a realistic plan so that you can have a doable monthly payment, based on your necessities.
Also, you can use the Federal Student Aid website to know which payment method will suit you best according to your income, family, and taxes.
Use Your Grace Period to Start Early
After you graduate, it is usual that your lender grants you a grace period where you don’t have to make any payment of your loans.
Do not waste this grace period and use it to understand your payment options, how much money of your income you can designate towards your debt, and if possible start making the payments you’d regularly be making.
This way, you’ll get used to paying a specific amount of money each month to your debt.
Budgeting Means More Money to Pay Your Debts
In case you missed it, check out our college finances blog post. There you will find several useful tips for saving money living a college lifestyle.
Yet, budgeting isn’t a habit only during college, it’s useful throughout life.
Budgeting will save you a lot of money, and you can use this habit to pay your debt faster. Consider your priorities and act according to your debts.
Increase your income
Cutting off expenses is necessary to pay your debt, but increasing your income is just as important.
You might not get a rise the minute you enter the workforce, but you can do other activities that can help you pay your debts.
You can get a part-time job, do some extra shifts in your current work, or start a side-hustle.
Avoid more debts, have a simpler lifestyle until you pay out your debt
This is a logical step, but don’t be so surprised!
Many people consider marriage or purchasing a new car even when they haven’t paid their loans. These purchases add up at the end of the day.
Wait until you can actually afford the things you want to buy, and this time probably after you have paid your debts.
How to Successfully Pay Off Student Loans
Student loans can be stress-provoking and overwhelming. But you are not alone as many college students struggle with paying off their student loans.
These simple tips will help you successfully pay off your student loans. It’s all a matter of being smart and budgeting correctly. Think of the investment you are making towards your future!
We understand how overwhelming this aspect of college finances can be. We hope that these tips will change your experience with paying off student loans.
Would you like to learn more about how to improve your college finances? Check out our article on 6 Essential Tips to Improve your College Finances.
Is your understanding of Financial Aid not the best? Check out our article on Everything You Should Know About Financial Aid (FAFSA).