Simple Ways to Manage Your Student Loans
Graduating with thousands of dollars in student loans may pose a number of financial challenges.
A college education can reap several personal and professional benefits, but graduating with thousands of dollars in student loans may pose a number of financial challenges. Learning how to live with debt while simultaneously staying on top of your bills, building savings and contributing to retirement may seem like a daunting task. The truth is that it all comes down to management.
There are several small ways that you can gain a handle on your loan balances and work toward financial independence.
1. Understand your loan
If you are unaware of how much you owe, your interest rate and your repayment terms, it may be difficult for you to budget effectively and pay off your balance quickly. Take some time to read over your loan documents and speak to your lender. Most lenders will allow you to manage your account online and often, your loan information will be broken down easily for you.
2. Consider consolidating
Managing several different balances and interest rates with different payment dates can not only leave you feeling flustered, but also leave room for error. To save yourself time and money, speak with your lender about consolidating your loans into one monthly payment with a single rate.
3. Choose the right repayment plan
Federal student loans provide repayment options, ranging from a standard 10-year plan to an extended 25-year plan. If you have not found a job or do not bring in enough income to meet your needs, you might also qualify for a program that sets payments based on your yearly wages. Keep in mind that the longer the repayment period, the more interest you will pay over the life of the loan. However, if you’re struggling to cover your bills or accomplish other financial goals, a longer payoff period may be in your best interest. Each option typically has restrictions and/or conditions so contact your lender to see what is actually available for your specific circumstance.
4. Automate your payments
Enrolling in an automatic payment program can help you keep on track with your payments. On time payments can help build your credit score and assist with a more disciplined money management lifestyle. As an added bonus, there are lenders who may agree to cut you a break on your interest rate if you allow them to automatically debit your account each month.
5. Pay more than the minimum
When you first begin paying your student loans, you may find that after several months your balance has not budged. This is because most of your payment is going to the interest balance first. To chip away at your bill quickly, try to pay more than the minimum amount owed. However, if you are sending in a check, be sure to specify that you want the additional amount to be put toward the principal balance. This strategy may help lower the amount of interest charges you incur.
Eliminating student loan debt can free up more income to put toward savings or other important spending categories. Through smart money management strategies and discipline, you can pay down what you owe more quickly and start building a stronger financial foundation.
The information contained herein may not represent the views and opinions of Zions Bank or its affiliates and is intended for informational purposes. It is presented for general informational purposes only and does not constitute tax, legal, investment or business advice.