After high school, what is next? Most students who finish high school are excited about the next phase of life. They want to advance and get into college. No one wants to wait while life goes on.
But what happens when their parents or guardians can’t afford to sponsor their diplomas? What if the students can’t afford to fund themselves too? In a bid not to be left out, many students take student loans.
Student loans have helped a lot of students begin and complete their tertiary education. It has helped them pay their tertiary fee, buy books, get other supplies, and also accommodate themselves.
But the downside is that the money has to be paid back because it’s a loan anyways! Student loans are not scholarships or grants that require no repayment. Student loans can be borrowed from either the government or private lenders.
To apply for student loans from the government, students have to fill out the Free Application for Federal Student Aid (FAFSA). Students and parents will provide their financial information on the form before sending it to the preferred school.
The financial aid officers at the schools scrutinize the form and decide who is qualified and how much aid a student deserves. An award letter is presented to the selected students afterward.
On the other hand, private student loans are usually more expensive. They have higher interest rates when compared to federal loans. Also, students have to make monthly payments while still in school, and the lender determines the terms and conditions
Adjustments That Will Help You Reduce Your Student Loan Debts
Tertiary education is essential, and it serves as a stepping stone for the real world. But what most people don’t say is that education is expensive. There are people who take years of labor to pay off student loan debt.
The student loan may be your only option, but you need student loan strategies to pay back. With student loan tips, you will learn how to pay off a huge amount of your loan as quickly as possible. Here are tips on how to manage student loans.
- Debt Tracking Tool
A delay in repaying your student loan can negatively impact your credit score. Although student loans require more time to pay, if you are reported late in your payment, your credit score will be damaged.
However, there are debt tracking tools that can help you through the process. A common feature in such tools is the debt payoff planner. The feature helps you keep track of your savings. It provides clean graphs and charts visuals of your spending.
This way, you can identify ways to cut down costs and minimize interest. Also, you can track your total credit utilization so your credit score will be strong.
Debt tracking tools also notify you of every financial activity, like overdraft charges or balance updates.
- Make Additional Payments
If you can afford to, sacrifice your luxury and make more payments to reduce the principal and total payoff time. Reducing the principal will mean a reduction in the loan duration, as well as the interest accrued. Making additional payments monthly will reduce the interest because interest is calculated based on the remaining loan balance.
- Get a Part-time Job In College
One of the quickest and most essential student loan tips to help you with your loan is getting a job while in school. This may sound stressful, combining school and work, but it’s possible. There are student jobs that allow you more time for your academics.
Getting a student job in college will help you keep your debt in check. With your earnings, you can start paying down your balance. Imagine saving $500 from your income monthly. You would have raised $6,000 by the end of the year.
Getting a part-time student job on campus is way better than outside campus jobs in terms of the class schedule. They will be more understanding of busy class schedules and exam periods. Look out for on-campus employment if you can.
- Have a Budget and Stick to it
Student Loan strategies like this one are stating that obvious, but you will need the discipline to pull it off. You need to know your monthly cash flow and how to work with it.
There is a tendency to want to live a buoyant life and live in the best dorm or always eat out. You may want to party every night and spend unnecessarily, but you should think of the future.
You must learn to curb your excess spending if you want to pay off your student loans quickly. This principle also applies when you have graduated. As long as your loan still remains, put your spending in check.
- Establish a College Repayment Fund
Student loan strategies number five – Set up a separate savings account for your student loan. You can put automatic transfers in place if you are unsure how much to devote every month. This is a practical student loan tip because you can’t spend the savings on unnecessary things.
If you are going to save up, ensure that you create a different account for your student loan repayment. Avoid using an already existing checking or savings account. You might be tempted to spend from it if the money is easily accessible to you. Also, do your research and find high-yield savings accounts for maximized results.
What Increases Your Total Loan Balance
- Paying less than the requested amount. Each month, you have to pay the stipulated amount. Your payment has to cover both your principal and interest. Paying less than what is required will affect your balance.
- Delay in Paying Back. Taking time to pay off will cause the interest to grow. However, most students can’t pay back while in school. By the time they are done with school, the loan balance would have increased.
- Missing Payment. Deferring your loan payment means an increase in the value of your loan. Students who have a hard time getting jobs after graduation may end up missing their loan payments.
Education is essential, and we all need to go to college. But sometimes, going to college means taking student loans because you cannot afford them. However, no loan comes for free, and you may spend years paying off your loan.
But there are student loan strategies that you can apply to pay off your loan quickly. With these student loan tips, you are on your way to living a debt-free life.