Dealing with student loan debt can be overwhelming and frustrating, but don't let your school loans keep you down. There are several ways to deal with these balances and keep your head above water. Here are seven strategies for dealing with student loan debt.
1. Make in-school Payments
Making payments while you're still in school is one way of dealing with student loan debt. With federal loans, repayment does not start until 6 to 9 months after graduation. You can however, reduce your total balance by making periodic payments while you're in school, even if you only pay your interest.
2. Defer as a Last Resort
If you experience economic trouble, federal loans give the option of deferment or forbearance. In both cases, loan payments are suspended or reduced for a temporary period. This is a wonderful provision if you cannot afford your student loan payments. However, with forbearance, interest continues to incur, which can increase your final balance. Therefore, only suspend payments as a last resort.
3. Consolidate to a Lower Rate
Juggling multiple student loan payments has its challenges. You may deal with different lenders, due dates and payment amounts. To simplify your finances, and to avoid overlooking a bill, consider consolidating all your student loan debts into one bill. In addition, a consolidation might result in a lower interest rate, which can ultimately lower your monthly payments.
4. Communicate with Your Lender
Defaulting on your student loan debt can ruin your credit score. After your payment is 30 days past due, your lender will report the delinquency to the credit bureaus. And unfortunately, this information stays on your credit report for up to seven years. To avoid any negative activity on your report, always contact creditors if you experience payment problems. There are several provisions available, for example, you can modify your due date, ask for a lower payment, or request deferment or forbearance.
5. Automate Your Payments
If you allow your student loan lender to automatically deduct payments from your bank account each month, you may qualify for a .25% interest rate reduction. This reduction not only lowers your monthly payments, it also reduces how much interest you pay over the life of the loan.
6. Pay More than Your Minimum
It's easy to get stuck in a minimum payment trap when dealing with student loans. However, paying just the minimum will keep debt hanging over your head for years. Take a look at your budget and see if you can pay extra. Even if you’re only able to double your minimum payments, this can reduce interest charges and help pay off the loan sooner.
7. Look into Forgiveness Programs
Certain federal loans qualify for student loan forgiveness. To qualify, you have to be employed in the public service field, and you're only eligible for forgiveness after making 120 qualifying payments. For more information about student loan forgiveness programs, visit the U.S. Department of Education’s official website.
For many, a student loan is the only way that they're able to attend college and get their degree. Unfortunately, student debt can be a nagging headache that never goes away. However, if you learn the best ways to deal with your student loan, you can pay off the debt sooner and protect your credit score.
What other tips can you offer for managing student loan debt?