Today, I read an article on USA TODAY, titled "5 tips to tackle student loan debt". It had practical tips to help manage student loan debt. My 4 tips will focus on paying off your student loans faster.
Tip 1: Avoid Deferments and Forbearance. Yes, deferments and forbearance are good ways to postpone paying on your loans, especially when times are hard financially. However, if it is at all possible to pay on your loans, then do so. There are several repayment options for federal loans, from income based payments to switching to longer repayments. Choose the option best for your situation. You only have a limited amount of times that you can defer or forebear your loans. Therefore, avoid taking deferments and forbearance unless absolutely necessary.
Tip 2: Avoid Capitalizing Your Interests. If you have to do a deferment or forbearance, the main thing to remember is that interest is still being charged and accrues monthly. If you have a federal subsidized loan, then the government is paying the interest during the deferment. If your loan is unsubsidized (or private), then you must pay the interest. If you don't pay periodically (at the end of the grace period), the interest will be capitalized (added to your principal) and your debt will increase.
Tip 3: Do Not Default! Don't default on your loans in order to avoid large penalty fees. You will still have to pay the loans back, so try to avoid this pitfall. By making monthly payments, you can avoid calls from debt collectors and the risk of wage garnishment. If you have defaulted, then try to negotiate a repayment plan that you can afford.
Tip 4: Make More Money. In order to pay off your loan, your goal should be to increase your income annually. If you have a full-time job, then consider getting a part-time job and use the extra income to pay down your loan. By paying down the debt faster, you will save money, because over-time you will pay less interest. You can develop a one-page resume to target part-time jobs and increase your income.
What tips do you have to help others pay down their student loans? Also, feel free to share your student loan debt story and the amount you owe.
No comments:
Post a Comment