Student loans are hard to avoid as much as they can be hard to pay back. Click here to read more about it. The best way to handle the loans is to follow some tips, so you do not end up with an insane amount of debt that you will find difficult to pay back.
All education loans are prepayment penalty-free, and you should take advantage of that. Whether you apply for private loans or federal loans, if you add little extra money to your monthly payment, it will drastically reduce your student loan balance. To do this, you need to specify with your lender the intention to prepay or otherwise it will just be viewed as your early installment on your next due payment.
- Pay While You Are In School
This might sound hectic or even boring, but you should consider that the unsubsidized loans will accumulate interest while you are in school. If you want to keep your interest to a minimum, you should offer direct payment towards your loans while you are in school. This will help you avoid inflation of the loan amounts.
- Set Goals And Budget
Budgeting in your head is not actually making a budget. When you lose track of all the numbers, you will lose track of your plans. It is very easy to be careless in terms of spending money once we do not keep check and balance. One way you can keep track of your budget is to note it in a spreadsheet or get budgeting software. Start with a less strict budget, and then gradually, turn it into a stricter one. You would not be able to adjust either if you started with too many restrictions. Your budget and goals should walk hand in hand. As you will begin to save up cash, you will notice that your goals will also adjust. Or as you set your goals, you will begin to save up and adjust your budget accordingly. Think about ways you can manage your spending. Consider how much your earning is or how much money you get every month and then think about when you want your loans to be paid off. Keep your goals in front of you because they will help you focus.
Your budget should circle around how many loans you have taken and how much debt you are under. Start thinking about your budget early, so you are not sorry later on. The second largest expense of most of the graduate students is their loan payment and at the first spot is their rent. In short, college students have a lot of responsibility and a lot of expenses along with the pressures of maintaining a social life.
You cannot consolidate private and public loans. When you consolidate your state and federal loans, it will allow you to pay less amount per month. However, once again, you will face the issue of interest that will add up as you make minimum payments. Consolidation will only simplify your situation and will give you one payment at a specific interest rate.
Consider refinancing if you have not yet as it will lower your interest rate and is for people who are looking to pay less interest. But you will have to be careful. Refinancing puts you in a private loan territory, where the options for federal or state loans do not apply. You should not refinance unless you have a good job and are sure that you will meet the principal on your loan.
Hopefully, these hacks will help you!