Student loans may seem like a godsend when you get them. However, they can grow to be impossible to manage in a very short time. This can result in some pretty bad experiences later on in life as you try to pay off these debts. The average balance that you leave college with could be tens of thousands of dollars. You would have to work very hard for a long time in order to be able to pay all of this off while trying to survive in the competitive world out there. What you need is proper management and these 4 tips will help you get started.
1. It’s like a mortgage, so treat it like one!
If you think you can afford it, try to treat the student loan like you would a mortgage on your house. Pay it off in larger sums. This way, the principal will be reduced much faster. This actually helps in more ways than one. When you pay it off faster, you pay less in interest. While student loans generally offer lower interest rates than bank loans, the mounting interest can still be a huge hindrance to you. You can also try to make the monthly payments on a biweekly basis instead.
2. Create a financial plan
This is more important than you might realize. Usually, student loans are long-term. That means that you will be paying them off for anywhere from 10-25 years. This can begin to feel a little hopeless after a while. You might start feeling like you’re trapped and that there is no way out. One way to help you feel better is to create a long-term financial plan for your loan payments. By creating a repayment timeline you can relieve your stress and know exactly when you’ll finish paying off the loan. Try to make a 3 to 5 year plan and see the difference for yourself. Just make sure you include any other loan or credit card payments in your plan. If you are delinquent on your student loans or other loans you might have to contact a firm like the Canterbury Law Group to file for bankruptcy. While student loans are generally not discharged in bankruptcy, in extreme cases they can be.
3. College loan repayment funds
There are special funds and financial plans available to help you pay off the debts without any hassle. Like an IRA, students deposit money to these accounts whenever they can. The debts are paid off every month automatically for as long as the money keeps coming into the account. This can be a load off your mind as well, because you won’t have to worry about making payments on time or missing any. All you need to do is deposit small amounts every week and you should be fine for the month.
4. Part-time job
If you haven’t gone to college yet, you should consider getting a part-time job in college in order to save up for your student loan repayments right from the start or to take out fewer loans. This is definitely one of the best ways to future proof your college finances and ensure your student loan repayments will be stress-free.
Project CRediT sources data from Wealthy Genius including net worth, earnings, and various wealth statistics.