Tips for Managing Your Student Loan
With two out of every three college students using student loan money to pay for their education, if you have a college degree there is a pretty good chance you also have student loan debt. If you are one of the 40 million Americans who took out least one loan for your higher education, there are several steps you can take to manage your student loans. We’ve compiled our top five tips to help you stay on top of student loan debt.
1. Know the Details of Your Debt
The average student loan debt upon graduation is close to $30,000. Approximately 10% of graduates owe over $40,000. The numbers alone can seem overwhelming, but it is important to know the amount, lender, and repayment options for each of your student loans. First, determine if you have federal loans, private loans, or both. The federal government backs federal student loans. If you are unsure, check the National Student Loan Data System. Any loans not listed there are private loans and will be listed on your credit report. You can get a free credit report once a year at annualcreditreport.com.
2. Know Your First Payment Details
When you graduate or leave college, you may have a grace period before your first student loan payment is due. The length of this grace period is different for different student loans. The lender sets the grace periods for private student loans. Federal Stafford loans have a six-month grace period. Federal Perkins loans have a nine-month grace period. Federal PLUS loans are a bit different, and will vary based on when the loan was issued and if it was issued to you or your parents. Know the date and amount of your first student loan payment so it will not come as a surprise.
3. Keep in Touch with Your Lender
Make sure your lender has all your updated contact information. This includes your mailing address, phone number, and email address. Your lender will send a lot of information about your student loans. Don’t ignore any mail or emails they send you and contact the lender if you have any questions. If you are having difficulty making your student loan payments, talk to your lender. It is in their best interest to help you find a way to manage your student loan debt. As intimidating as money concerns can be, ignoring them only makes things worse in the long run.
4. Know Your Repayment Options
Federal student loans are automatically set up on a standard, ten-year repayment plan, but this is not the only repayment option available to borrowers. You may want to consider whether an income-driven repayment plan is right for you. These plans, based on the amount of your household discretionary income, can lower your monthly payment. Keep in mind, any time your lower your monthly payment you are also extended your repayment period, which will increase the amount of interest you pay over the life of the loan.
5. Know Your Options if You Have Trouble
If you are having trouble making payments on a student loan, contact your lender. For federal loans, you may be able to change your repayment plan, receive a deferment or forbearance. There are even federal student loan forgiveness programs available for teachers and public service professionals. If you have private loans, you should still contact your lender. While private loans do not qualify for these federal programs, many lenders offer options to help you make lower payments for a short period of time.
The truth is student loan debt can be daunting. But the only way to manage your student loan debt, as with any money related concern, is to face it head on. As long as you know who your lenders are, your balance, your repayment plan, and your options if you are struggling, you have the tools you need to manage your student loan debt.*
*This article provides broad and general guidelines and does not constitute professional financial or legal advice. You should not use this article as a substitute for your own judgment, and you should consult professional advisers before making any tax, legal, financial planning or investment decisions.
