Student Loans: Five Things to Know Before your Payments Begin
I f you are a college student who is preparing for graduation, or if you have already graduated, congratulations! You have achieved a major life accomplishment. In addition to celebrating and job- hunting with your new degree, there are some adult-sized responsibilities that come with paying back those student loans. Here are five things you should be aware of before your payments begin.
You Will Need a Budget
Once you graduate and begin looking for employment, you will need to consider the type of degree you have and the jobs that complement your degree. Once you find a job, be aware of the monthly income you will be receiving. Making a budget according to your new income will be crucial in sticking to your loan payments. Fortunately, most loans have a six-month grace period before they require that first payment. This will give you a little time to become familiar with your new financial responsibilities. Check out our Be Your Own Boss page for links to part time jobs that can net your $1,000 or more each month!
“Get to Know” your Loans
It is imperative that you understand all aspects of your student loans. Being proactive and researching your particular loans will keep you ahead of the game and reduce your worries. Gather all of your statements and call your loan servicers to find any information about your loans. Learn about the type of loans you have, precisely how much funds that were borrowed, the interest rate, how long it will take you to pay them off (even if you decide to pay more on them each month), and the type of repayment plan you decide to do. Check out our article Student Loan Types Explained to learn about your loans.
Being proactive and researching your particular loans will keep you ahead of the game and reduce your worries while you are in repayment.
How to Make Payments
Finding out the varying ways to actually make the payments is another way to be proactive in your journey of being a successful adult. You may be able to have the payments automatically deducted from your account, pay by regular mail, make a payment each month over the phone, or even pay online. Being familiar will your choices will ensure you make each payment on time; if you are unable to make a certain type of payment one month, you will know the other ways to do so. Check out our article Repayment Plans Explained to learn about various repayment plans available to you.
Know Your Options
If you are unable to find employment, become ill, decide to continue your education, or have other extenuating circumstances that prevent you from paying your loans back, knowing your options of extending your grace period can be very helpful. Options such as deferment or forbearance and being familiar with the differences and similarities of each, as well as the advantages and disadvantages of each, can help you breathe easy in times of financial distress or unemployment. Check out our article Deferment vs Forbearance – What’s Right for You? to learn more about both options.
The Choice to Refinance
Refinancing your loans may be the ticket to lowering your monthly payment, reducing your interest rate, or both. If you have good credit, this may be an option for you. Consolidating your loans is another option; bundling all of your loans into one payment rather than making several monthly payments can help. In order to find more information about these options, contact your loan servicer or a reputable loan consolidation company. Researching the best, highly-dependable companies, as well as the choices for you is necessary in order to get the best interest rate and plan. Be sure to look at our Refinancing and Consolidation table to see our favorite companies to work with.
The key to preparing for the next chapter in your life is planning. Thinking ahead and making financial goals for your future is imperative to being successful. Keeping a good credit standing is very important for your future purchases, so be sure to learn all you can about your loans and you will be on your way. Remember that knowledge is power!