Thursday, August 9, 2012

Pay Off Your Student Loans ASAP

There are many new college grads out in the workforce that are dealing with 5-and sometimes 6-figure student loan debt, and with the recession and unemployment rate still in full swing it's not a good time to be dealing with a ton of student loan debt.
Back in 2009 a typical student carried an average of $24,000 in student loan debt by the time they graduated. Consider that a small investment in comparison to what that investment will yield a student for the life of his career.
In any case, in this current economy it's not guaranteed that you're going to get that high paying job straight out of college, so there are some steps that every recent graduate should make that's carrying some student loan debt out there in the work force.
Put your repayments on cruise control. Everybody knows that your credit score can get in trouble by not making your payments on time, so it's a good idea to set up some sort of automatic payment schedule straight out of your bank account to pay for your student loans. Setting up automatic payments-through most banks-should be relatively easy, so it's worth taking those steps so you don't miss any payments.
10 year time horizon. Giving yourself a goal of paying off your student loan in 10 years will save you a significant amount of money in interest.
For example if you have $30k in student loans and you pay it off at 6.8% in 10 years your payments are going to be around $345 and the interest that you're going to end up paying is going to be a little over $11k in interest. If you run in some trouble and stretch out those payments for 20 years the interest you're going to end up paying on that loan is $24,960.95, and if you stretch those payments out to 30 years the interest you end up paying is going to be a whopping $40,405.93!
Organize your loans. If you went to multiple schools, obviously you're going to be juggling several loans. It's going to be imperative that you organize those debts or find some sort of system that organizes those debts for you. The government offers a great way to track your federal student loans, if you Google the National Student Loan Data System you will be able to find them.
Knock off the high interest rate loans first. Taking care of the high interest rate loans first is "Debt 101", if you take care of your highest interest rate debt first you will save yourself a significant amount of money in the long run.
Look into IBR. Everybody falls on hard times and if you're having a difficult time paying back your student loans you might want to look into the federal Income-Based Repayment program. The title of the program basically speaks for itself; the repayment plan is based on your income and makes the monthly payment a little more affordable.
Keep an eye on student loan news. The government is currently trying to cut back on as many things as possible, and sometimes education is the first thing to suffer from these cutbacks. It's a good idea to keep your eye out for any new developments that may affect your student loan or financial situation.
Correspond with the Federal Student Aid Ombudsman. There may be a good chance that you're going to run in some sort of problem with your Federal Student Aid, so it's a good idea to keep in contact with the Federal Student Aid Ombudsman to make ensure everything is running smoothly. When things don't run so smoothly it's also a good idea to make sure that you know where to go when you have a dispute with your lender.