Managing Student Loan Debt

Student loans are on the minds of all college grads – recent or not. It is important to have an understanding of your loans and the ways to make them work best with your current and future situations.

Know Your Options

Most lenders offer different repayment options. After all, everyone is not on the same financial ground after school. Discussing repayment options with your lender let’s them know you are serious about paying your loans back in a way that works best for you. Some options are income based repayment plans, graduated plans that increase the monthly payment at different stages, and even consolidating loans. You will not know your options without exploring them first. Become an expert in your debt to make it work with you – not against.

Make Larger Payments

When possible, pay more than the minimum on your monthly payment. It won’t always happen, but when possible it’s a great investment in yourself. Additionally, larger payments cut into your overall debt and save you money on interest in the long run. The sooner you pay off your loans, the less interest can accrue.

Tax Breaks

There are often tax breaks associated with student loan interest. In the U.S. for example, a tax credit is applied for the amount of interest paid the following year. Do yourself a favor and take that amount and apply it directly to your debt. It may be tempting to spend that money, but it’s money you wouldn’t have without your debt. Additionally, using all or some of tax returns can be a great way to take a chunk out your loans. You have already lived without the money, why not pay down your debt with it.

Pay On Time, Every time

Paying consistently and on time is extremely important. Ignoring payments can be extremely detrimental to your credit and will pose other issues down the road. Bad credit can prevent you from buying a car or house. Plus, consistent on time payments provide you with reassurance that your debt is being tackled bit by bit.

Avoid Additional Debt

If you can, try to avoid any additional debt – especially credit card debt. Accruing more debt can only cause more headaches and normally higher interest rates. By keeping your debt down, you are able to tackle one piece of debt before accruing more. It will be inevitable, buying a house or a new car will add onto your debt, but keeping it down for as long as possible will only benefit you in the long run.

Student loans can be a large issue for some people and is important to know what you can do. Stay on top of your debt and it won’t cripple you. Make your debt work with you – not against.