What To Do If Your Student Loan Repayment Period Is Beginning
Many students graduate in May/June of each year and are given six months to begin repayment on their student loans. This is known as the “grace period.” When it ends, thousands of students are left scrambling trying to figure out what to do.
If you’re anything like most college graduates, you’ve spent the last four years focusing on getting good grades, making friends, participating in clubs and extracurricular activities and, of course, interning. However, you probably haven’t spent much time thinking about how you’ll being to pay back that student loan debt you racked up.
Before you freak out, here is what you need to know about paying the loans that will make this a whole lot less scary:
1. Know What You Owe
Although this sounds very obvious, you’d be surprised how many borrowers avoid figuring out how much they owe because they aren’t ready to deal the reality. First, you’ll need to find out who your lender is, aka who you owe, and then you’ll need to find out what loans you have and how much you owe on each. I also suggest that you find out your interest rate and whether it’s “fixed” or “variable” as this can make a significant difference in the long run.
The variable interest rate is associated with private loans, which are different from federal student loans, and are a bit trickier to deal with. The variable interest rate will continue to increase over time and make repayment more challenging and costly. If you do have a private student loan or are unsure, give us a call immediately for your best repayment option (800) 940.8911.
2. Start Saving Now
Starting to save each month for your student loans is the best thing you can do to ensure you don’t fall behind on your loans. Interest and late fees will accrue and it will end up costing you much more in the long run if you fall behind.
The sooner you can start making payments the better off you’ll be. I also recommend paying months in advance if you have that option. You may need to dip into your savings a bit, which normally I wouldn’t recommend, but the loans will cost you much more in the long run if you don’t keep up with them.
3. Get Into A Repayment Program
Many borrowers get out of school only to realize they aren’t able to pay the minimum monthly payment their loan servicer requires. Luckily, there are repayment programs available to help those in this situation.
The income-based repayment plans were put in place to assist borrowers in paying off their loans. These programs take into account your income and family size and set your monthly payment based off this to ensure you’re able to make payments on your loans.
While it can be tricky to navigate the bureaucracy of the application process for these programs, it is crucial you enroll in one should you be eligible. Call us today to speak with a loan specialist (800) 940-8911.
4. Automate Your Payments
Whether you are eligible for an income-based repayment plan or not, it’s crucial you automate your payments. This is the easiest way to avoid default and it ensures you won’t have to stress about late fees.
You may even want to consider setting up a separate checking account for your student loan payments and all other bills. This will make you responsible for paying your bills first and then see what is left for you to spend each month.
5. Stay On Top Of Your Loans
If you are lucky enough to get into an income-based repayment program it’s crucial that you know how it works. Each year you will be required to “reapply” for the same program. This will consist of you sending in income and family size verification to your lender so they can set your monthly payments for that year. A lot of borrowers are not aware they need to recertify and unintentionally get kicked out of their programs. If you aren’t in an IBR program it is still very important that you know where you stand each month with your loans.
For more information, or to speak to a loan specialist, give us a call at (800) 940-8911.