Top 10 Student Loan Tips For Recent Graduates
December 21, 2012

It’s that time of year again, when we’re all feeling that holiday pinch. Check out these top 10 tips to beating your student debt so it doesn’t beat you.

1. Be Informed About Your Loans

Much grief can be avoided simply by knowing your stuff. You’ll want to learn as much as you can about what kinds of loans you have in order to understand your repayment options and whether you might qualify for loan forgiveness down the road. Stay on top of how much you owe at any given time and to whom you owe it.

2. Be Aware of Your Grace Period

It’s generally beneficial to take advantage of your grace period, however, every type of loan is different in this respect. You need to know exactly when your grace period ends so that you don’t miss your first payment.

3. Educate Yourself About Personal Finance

There are loads of ways to save money if you know what you’re doing. For example, there are any number of tax incentives and deductions you can take advantage of for your student loans.

4. Choose The Right Repayment Plan

You can change your repayment plan at any time; you aren’t stuck with the first one you signed on to. Depending on your income, career and what kinds of loans you have, you may be eligible for quite low monthly payments and eventual loan forgiveness. Two excellent options are Income-Based Repayment and Public Service Loan Forgiveness.

5. Remain Calm and Trust Yourself

If you’re really struggling to make your payments there are deferment options, such as unemployment deferment for those having a hard time finding work in today’s tough job market. Following this guide will also help keep you aware of your options and thus level headed about your hopes of staying on top of your loans. For instance, it might work out better for you to be on Income-Based Repayment, paying as little as $0 per month rather than choosing a forbearance option during which you’ll continue to accrue interest on the loan(s).

6. Stay Out Of Default

Seriously, there’s no reason to go into default; there’s a plethora of ways to avoid it. Defaulting will mess your credit up for years to come you’ll still end up having to pay off the loans.

7. Aim For Loan Forgiveness

Several repayment options offer eventual loan forgiveness after a set number of years of on-time payments. IBR and PSLF offer loan forgiveness after 20 and 10 years respectively.

8. Consider Debt Consolidation

There are both pros and cons to debt consolidation; it’s simply a matter of deciding if it’s right for you. On the up side, consolidating your debt will give you the appealing simplicity of paying only one monthly bill with a fixed rate of interest and may also reduce your monthly payments. On the con side, it’s possible you’ll end up paying more interest in the long run, but it depends on your particular loans.

9. Reduce Your Principal Whenever Possible

Hopefully you’re saving, right? If you can afford to pay more than your monthly minimum, you’ll be lowering your principal, which will lower the total amount of interest you’ll have to pay throughout the life of the loan.

10. Wipe Out High Interest Loans First

If you’re working on reducing the principal of one of your loans, start with one that has the highest interest rate. If you have any private student loans, those will be the ones you’ll want to get rid of first.

Staying on top your student debt is all about being in the know. It’s a tall order, though, there’s a lot to learn and it’s all pretty complex. If you need a hand figuring out how best to manage your debt, there are student aid organizations that can help.