Tips for Repaying Student Loans
Whether a college student has plans to begin loan repayments fresh after graduation or six months after graduation, correct information and knowledge can help ease the process of beginning to pay down student debt.
America Saves, an initiative encouraging people to save money, and Sallie Mae are doing their part to educate recent graduates by providing tips on how to successfully make the transition from college borrowing to graduate repayment.
“This November, many new college graduates will need to factor student loans into their spending and saving plans,” said Nancy Register, America Saves director. “This may be the first time many students have had to create a budget and savings plan to ensure they can meet both their financial responsibilities and save for their future.”
Related: Student Loan Default Rates | 2011 Student Loan Debt Increase | Resource for College Financing
In an effort to help recent college graduates with student debt repayment, America Saves and Sallie Mae offer the following tips:
- Know how much you owe each month. – Track one month’s spending and create a budget that includes your monthly student loan payment. After analyzing the budget, you may find that you will need to cut unnecessary spending to help pay down debt or that you’re able to a little extra on your loan each month to pay down your debt faster. Contact your student loan servicer to calculate different payment scenarios.
- Make payments automatic. – If you sign up for automatic payments, the loan payments will be electronically deducted from your checking or savings account. Some loan servicers will provide you with a lower interest rate for signing up for automatic payments.
- Make your payments every month. – Resist the option to postpone payments, because deferment or forbearance typically means you’ll pay more over the life of the loan. Be empowered by making timely and routine payments.
- If you fall behind on your loans, get help. – Contact your loan servicer to discuss options and resist the urge to dodge their phone calls. Sometimes a different payment plan or temporary postponement of payments can give you the extra time you need.
- Keep your loan servicer updated with any changes. – Always notify your servicer of any changes. This can include changes in your mailing address, email address, and phone number.
- Beware of scams. – Don’t become a victim of fraudulent companies who claim to offer easy ways to eliminate or lower your loan payments. When in doubt, contact your student loan provider.
- Keep an emergency fund in case of unforeseen circumstances. – Set a goal to save $500 to $1,000 for unexpected financial challenges. By saving even small amounts each month, you can add to your emergency fund and have peace of mind knowing you can handle any emergency while still paying down your student debt.
Follow Valerie Jones on Twitter @ValerieJonesCMN