Student loan debt in the United States has reached more than $1 trillion and is making life after college challenging for those who used student loans as a means to help pay for college. As the national student loan payment deferral comes to an end, now is the time for borrowers to develop a plan to tackle their student loan debt.
Let’s look at ways to help manage student loan debt no matter the dollar value.
- Calculate/Organize Your Debt
The first step is to create a plan to understand your debt holistically. Many students accept loans from various loan providers, so it is imperative that your debt is organized so that you’re able to manage your student loans efficiently.
- Understand the Terms
The next step is to understand the terms of each loan. The interest rates and guidelines will likely vary from loan to loan and will influence the repayment plan created for your debt.
- Determine the Grace Periods
Each loan has a grace period, which is the amount of time you have post-graduation before loan repayment is required. Knowing the grace period for each loan will help you with creating a strategic plan.
- Explore Forgiveness and Special Programs for Repayment
There are student loan forgiveness programs and special programs that borrowers may be eligible for. Here is more information about student loan forgiveness that will help you create a plan that may include not having to repay some or all of your loans based on the requirements for each program.
After you have explored the steps previously stated, determine what works best for your finances. One of the most common tactics used to tackle loan debt is to start with the highest interest loan. Once the highest loan is paid off, move to the second highest interest rate loan. Another paydown method is to make extra payments on the principal balance. Paying down the principal balance reduces the interest you pay over the life of the loan.
Loan servicers also offer the following options to temporarily suspend payments.
Loan Deferment
Borrowers can ask for loan deferment to relieve the duty of paying loans back for a period of time. During the loan deferment period, interest may not be charged.
Loan Forbearance
Loan forbearance allows borrowers to stop making payments for a certain period of time; however, different from loan deferment, interest will continue to accrue and will be added to the total loan balance.
Source:
Epstein, Lita. 2022, Investopedia, 10 Tips for managing your student loan debt. <https://www.investopedia.com/articles/personal-finance/082115/10-tips-managing-your-student-loan-debt.asp>
