A Guideline for New Graduates about Their Student Loans

If you have taken out a federal or private student loan then it’s likely that you see it as a blessing. Chances are that without this financial boost from the government or the private sector you would not be able to continue with your education. That’s a really good reason to be thankful. That is until you finish your studies.

As you near the time of your graduation, it becomes more important that you start thinking about how you can repay your loan. This is definitely not the best period for you to be burdened with debt. The economy still has not recovered its full strength, but there is no ducking the fact that you need to pay what you owe. So you have to do the best that you can and find a plan, by which you can start making payments towards what you owe. Here is a simple guideline that you can follow when it comes to paying off a student:

1.    Make Automatic Payments- Studies have shown that about a third of all borrowers miss their payments. That small mistake can get you into a lot of trouble. The good news is that it is pretty easy to avoid it especially if you are willing and capable of making payments towards your loan in the first place. You can just setup automatic payments using your bank account so there is no chance of you missing a payment.

2.    Ten Years Should Be Your Goal- The usual term for a student loan is for ten years, but it is easy to get an extension for that if you cannot make it. Getting an extension is not the best move on your part however. That can increase the interest and you are going to be burdened with the debt for a longer time. So even if you have to make sacrifices aim for the ten years.

3.    Organize- It can be challenging to keep track of your student loans if you have several of them. Losing track of just one of them can have some serious consequences. Keep all records of your loans. If you are missing on anything try to get in touch with your school so you can keep them updated.

4.    The Highest Interest Rates Should Go First- If you have several student loans then you should prioritize paying the ones with the higher interest rates. Speeding up the payment would not get you penalized so if you get any extra money then try to divert it towards the high interest loans.

5.    IBR- This stands for the Income Based Repayment and it is a program where a borrower is allowed to make payments based on what he can afford. Usually it is set at 15% of your income. You should consider taking advantage of this program if you feel that you cannot meet the normal payment method.

6.    The Federal Student Aid Ombudsman- In case you disagree with your lender it is better to help the aid of this government agency tasked with monitoring student loans.