“9 Easy Steps to Create a Successful Plan to Pay Back Your Student Loans”
The last batch of millennials have just begun to get their footing in the professional world, but what should be an exciting period of your life may be plagued with worries about student loans. Today, the vast majority of Americans graduating from university have some form of student loan following them into adulthood. They can be anywhere from $10,000 to $100,000 or more, but they don’t have to loom over your head. There are tons of strategies and techniques out there to help you along the way. Here are 9 easy steps to create a successful plan to pay back your student loans.
1. Plan a Monthly Budget
This is the first major hurdle you have to pass, and you may even have a rough idea of a budget in your head. But if you haven’t done it already, now is the time to get everything written down so you have hard figures you can follow. You will want to dedicate as much of your disposable income as comfortably possible, so make sure you have a record of where your money is going. This is the easiest way to cut down on spending, remember, every little bit helps in the long run.
2. Ask Your Employer About Assistance
Depending on your occupation and employer, you may be eligible for a student loan assistance program. Many employers offer student loan assistance in their benefit packages, particularly in the healthcare and automotive industries, as well as some public servant positions. This is an important fact to consider when seeking employment after graduation. When pursuing your career, consider looking for employers who offer this benefit or negotiating it beforehand. Keep in mind that not all employers who offer this benefit provide it to all their employees or make it well known, so this is a good conversation to have.
3. Consider Student Loan Forgiveness
There are many other programs that may help you with your student loan outside of private employers, such as those offered by your state government. This form of assistance can provide substantial help, particularly if you have federal student loans. They can include a wide range of criteria, however the most pressing requirement is usually working for the government in some capacity and the duration of your period of employment with them. The two most popular programs offered by the government are the Public Service Loan Forgiveness and the Teacher Loan Forgiveness programs.
4. Pay Beyond the Minimum
Ultimately, the best way to pay back your student loans is to simply consistently pay over the minimum required. A portion you pay back will inevitably be interest, however this is accumulated over the course of your repayment plan. By paying over the minimum amount, you can effectively reduce the duration of your repayment plan and pay less on the overall interest. However, whendoing this, you should contact your loan provider and ensure the excess of your payment is going towards your current balance to avoid issues.
5. Use Autopay
Signing up for autopay means the balance due each month will be automatically drawn from a particular account. This provides two major benefits. Firstly, autopay ensures you never accidentally miss a payment date, so you can avoid running into issues with a poor credit score. Secondly, both federal and private lenders also reduce your interest rate when you sign up for this service. This ultimately amounts to a small figure, but it does provide some additional support. Contact your lender and see if they offer any benefits for autopay enrollment.
6. Pause Payments When Necessary
Although the goal may be to make as many payments as possible, sometimes you may be caught in a predicament where you’re unable to pay for a few months. Missing a payment is never advised as it could negatively impact your credit score and your overall student loan. However, when needed you can always contact your lender and request a deferment. This can give you the time you need to get back on track, but remember this is a last resort. During your deferment period, you’ll likely still be incurring interest.
7. Consider Refinancing
Do you have a great job and good credit score? Then refinancing your student loans may be a good way to shave some time and interest off your student loans. This process may sound complicated and difficult, but it’s actually quite simple. In most cases, a new lender will essentially pay off your loan and offer you a new one with different and agreed upon terms. For example, you can change a 15 year loan to a 5 year loan and get much less interest, but you will have to make higher monthly payments.
8. Utilize Additional Income
As your career develops and you mature into your profession, you may get a promotion or diversify your streams of income. When you have additional income to factor in, you should adjust your monthly budget to suit. This may simply mean making larger payments every month, or if your new position is stable you may decide to move forward with refinancing. However you decide to utilize your additional income, always consider how it will affect your loan. It may be tempting to stick to your original budget and channel your new income into your leisure allowance, but this prolongs the duration of your loan unnecessarily. You may even decide to seek out additional income by pursuing a side hustle or new position at work, explicitly for your loan repayment.
9. Go Slow & Steady With a Sustainable Plan
As you begin your professional career, or get settled and begin planning a future, you may feel inspired to get your student loan paid off as soon as possible. However, it’s important to conside the sustainability of your long term plan. Not all of these suggestions will work for everyone, it can be difficult to get through to a forgiveness or assistance program, and a lucrative side hustle can be difficult to maintain. But even if all you can afford to do is pay the minimum during your term, as long as you commit yourself to consistency and timeliness, you’ll be certain to work your way out.
Paying Back Your Student Loans
All of these suggestions should give you a better insight on how you can create a successful plan to pay back your student loans. This is a long process and can take quite some time to complete. Review the terms of your loan and start looking into the resources mentioned that can help you achieve your financial goals on schedule. The final, and perhaps the most important tip, is to start early and stay on top of your game!