You did it! You graduated from college and are ready to start making a splash in your new career. There is so much to look forward to, but it is also time to start thinking about dealing with your student loans. It can be difficult for many students to get their feet underneath them at first, and student loan payments can add to that burden. Follow these hot tips for keeping a good credit rating and keeping up with your student loan payments:
- Keep track of the details. Keep a record of each balance, lender, and repayment terms in a place that is easy to reference. If you are unclear about any information, you can call the lender or check your account at www.nslds.ed.gov. this site shows lender information, amounts due, and repayment statuses for every federal loan you have. Private loans will not be listed on the site, so you will need to refer to your billing statements or original loan paperwork. If you can’t find your paperwork, contact your school for information.
- Be aware of grace periods. Lenders have varying grace periods on loans. The grace period is the amount of time you have after graduation before the first payment is due. Federal Stafford loans have a six-month grace period, but Perkins loans give you nine months. Make sure you know the grace period for each loan so you can make your first payment on time.
- Choose the best repayment plan for you. Federal loans are automatically set up on a 10-year repayment. If the payment amounts are too high for you, change plans to make repayment easier for you. Just be aware that extending your repayment time will lower your monthly payments, but will increase the amount of interest you pay. In addition, if you find that you are making much less than you had anticipated, check out the Income-Based Repayment option for federal loans. This option keeps your payments aligned with your income and forgives any remaining balance after you make payments for 25 years. In addition, those working in the nonprofit and public sectors may have their loans forgiven after only 10 years. These options are not available on private loans, but your lender may work with you if you are having difficulty paying.
- Pay off highest interest loans first. If you have a variety of government and private loans, check the interest rates and pay as much as possible on those with the highest interest rates first while paying the minimum on all others. This will save you a great deal of money in interest and will allow you to get out of debt more quickly.
- Try to lower your principal. Federal student loan payments are applied first to late fees, then to interest, and finally to principal. Any time you can afford to pay a little extra, do so. This will allow you to lower the principal and reduce the amount of interest you will pay overall. When you pay extra, make sure to also send a written request that the extra money be applied to your balance.
By following these simple tips, you can keep your student loans manageable and pay them off as quickly and cheaply as possible. Just remember that the most important thing you can do if you are having trouble making payments is to contact your lender immediately.