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When students enter the hallowed halls of higher education, they’re usually too young to understand how much that education costs and what it’s going to take to pay it back. Most graduates will be paying off their loans for years after school has become a distant memory. However, you may be able to get the student loan debt paid off earlier if you’re organized, aggressive, and willing to sacrifice in the short term to be free of debt in the long term. Here are six tips to help get you started.
- Know How Much You Owe. Student loans can be a lot like medical bills. You’re never quite sure how much you owe until the letter arrives in the mail. If the grand total takes you by surprise, then at least take comfort that you’re in good company. Graduating students frequently discover they owe thousands more than expected.
- Get Organized. After figuring out how much you owe (and to whom), set up documentation. Keep track of the lender, balance, and repayment status for each of your student loans. It’s much easier to attack those balances when you can see them clearly laid out.
- Don’t Miss Payments. We know what you’re thinking – Thanks Captain Obvious! However, it’s easy to lose track of what needs to be paid if you have multiple loans. Details such as grace periods can vary loan to loan, and one missed payment can have a disastrous impact on your balance. Consider setting alerts in your personal calendar so those monthly payments go out on time.
- Keep Your Contact Information Current. Most students are on the move after graduation. Jobs, relationships, or the desire to travel may mean more than one change of address. It’s absolutely critical to keep your lenders in the loop so documentation regarding your loans doesn’t get lost in the mail. Late fees can accrue, and your accounts can easily wind up in credit and collections because you failed to have your mail forwarded properly. The loans don’t go away just because you didn’t open the envelope, although wouldn’t it be fantastic if they did!
- Select the right repayment option. Lower monthly payments might seem more appealing, but you could be shelling out a lot more in interest over the life of your loan. Keep that in mind before you sign on the dotted line.
- Pay early if you can. If your salary allows you to pay more than the minimum, then start by targeting the loan with the highest interest rate first. As you pay off each loan, reward yourself to stay motivated before moving on to the others. It’s hard to maintain a plan of attack if you’re constantly feeling deprived.
Of course, you can begin an aggressive repayment plan with the best of intentions – but life happens to everybody. If you’re confronted with an illness or unemployment, there’s no need to go into a tailspin. There are options such as deferment where you can delay payment of the principal and interest of your loan, and forbearance where you can stop making payments or reduce your monthly payments for up to a year.