Student loans are a helpful tool for your higher education journey as long as you know how to avoid potential traps. Knowing some best practices will help you avoid big financial burdens and get you on your way to starting your professional life.
1. Know Your Loan Well
It’s important to know the terms of your student loan, especially if you have more than one. Keeping track of balances and repayment status will help you stay on track.
You should also know the grace periods on your loans. This will allow you to plan accordingly when you need to start making payments. The better you know your loans, the more you’ll be able to remove stress from the equation.
2. Borrow Only the Amount You Need
Precise budgeting will help you borrow only the amount you need for your education. One of the most common mistakes students make is overestimating their costs for the duration of their academic careers. Weigh the expenses against your savings, your family’s contributions, and any financial aid you receive.
For recent graduates, the time you will need to start repaying your student loan is near. Use the budgeting skills acquired when taking out your loan to stay on track in the future.
3. Get a Part-Time Job
Depending on your field of study, your free time can vary. If you can hold a job while pursuing your degree, it will be easier to get started on repaying your loan. A part-time job can bridge the gap between graduation and finding work in your field for recent graduates.
4. Prepay When Possible
Contributing more than your monthly payment will only speed up the process of paying down your loan. Any extra amount you pay past the predetermined monthly payment should go towards the balance. If you don’t expressly ask your lender to apply the extra amount to the balance, it will not go toward reducing the balance.
5. Choose the Best Repayment Option
Depending on the duration of your loan, you can manage to reduce the monthly payment to an amount that is easier for you to pay. However, the longer the life of the loan, the more money you will end up paying in interest. Choose a repayment option that suits your plans while avoiding unnecessary financial burdens for decades to come.
The same is true if you’re a graduate looking to refinance your student loan. Try to avoid any pitfalls by planning into the future rather than making decisions based on your present situation. A best and worst-case scenario will help you arrive at the optimal repayment option.
6. Remain Calm
People can struggle during difficult economic times. While having trouble making payments can be stressful, it’s important to keep a clear head. Talking to your lender can help avoid problems that can surface if you refuse to face the matter.
As tough as it may be, a clear mindset will help you find a solution. You may be able to secure a forbearance while you get back on your feet. Just keep in mind that during a forbearance, your loan will continue to accrue interest.
7. Pay Off More Expensive Debt First
Interest is the most burdensome part of a loan, and attacking the higher interest rate loans first will relieve you of the heavier burden. First, paying off higher interest debt means you’ll be making repayment a downhill stroll rather than an uphill battle.
8. Find the Right Lender
Finding the right lender is half the battle with student loans. Your education should be the launchpad to your future rather than an obstacle to realizing your dreams. The experts at Ascent can help you find the right graduate student loans for your needs.
Be Smart About Your Student Loan
Following a few best practices can save you money as well as the hassle of having a financial burden. Choose the right loan for your specifications and get your post-graduate life off on the right foot.