For better or worse, student loans have become a massive part of many young people's lives. So many are pursuing higher education, and unfortunately, that can come at a rather steep cost on average.
Implementing wise money management methods to help pay off your student loans efficiently will benefit anyone greatly in the long run!
Developing an action plan to combat your loans will free you from the long term financial stress of paying off loads of debt. Don't let your loans overwhelm you!
1. Know your payment amount
The first step to forming an action plan to pay off your loans is knowing exactly how much money you've borrowed to attend school. Using a Student Loan Calculator on a website like savingforcollege.com will benefit you greatly in figuring out exactly how much you owe every month.
This calculator can calculate both federal and private loans, making it useful to all university students who've borrowed money.
Once you've calculated your payment amount, you can compare that number to your monthly income and begin making a budget around the facts and figures.
2. Understand the payment plans
When you accept federal loans, you're offered a variety of payment plan options to pay off those loans. You must be familiar with all choices available and let your loan service provider know which plan you'd like to partake in.
If you don't tell your loan provider that you'd like to participate in an alternate payment plan, you will automatically be enrolled in a standard 10-year payment plan. This standardised plan might involve monthly payments that are out of your current budget.
This is why knowing your plan options is so important.
3. Give thought to consolidating your loans
If you've taken out several loans from several different loan service providers throughout your time in university, then it might be wise to consolidate those loans early on. This will make it easier for you to keep track of your payments.
Consider consolidating all of your federal loans into one loan, for example. Private loans might also be consolidated depending on the loan service provider.
4. Figure out if you can make payments automatically
For some loan payment plans, paying your loans automatically will save you a small percentage of interest rate reduction.
This depends on who is providing the loan, but it is an option worth exploring. If you can pay automatically, you will also reduce the stress of having to deal with the manual payment every month.
It's easy to feel overwhelmed by student loans, but it's essential to make a plan early on. The sooner you can put an action plan into place, the earlier you will be empowered financially to make the best decision for you and your financial life.
Try not to get overwhelmed by the big picture. Take your loans one step at a time in bite-sized pieces. With the help of a budget and good planning, there's no need to be overwhelmed by your loan payments.