You may feel a new sense of liberation having just graduated. To you, the post-grad life means no more homework, no more tests, no more surprise presentations, or six page papers at three in the morning. No more responsibilities right?…Wrong. If anything, you have just acquired one of the biggest responsibilities known to post graduates, paying off student loans. Make sure you are planning ahead and saving yourself money so that your loan repayment process can be a smooth transition and doesn’t completely stress you out.
The best way to save yourself stress, and money, when it comes to paying back your student loans is to start thinking ahead. Try these seven tips to save money on your student loan.
1. Utilize your grace period.
You typically get a 6 month grace period with most of your student loans, primarily with the federal subsidized loans and unsubsidized loans. With the Federal Perkins Loans, you get a 9 month grace period. Use this time wisely. Start making payments early, and get ahead of the game, or, alternatively, save up some money so that you have an emergency fund to back you up if you are ever short on cash for making a payment in the future. A lot of people use this time to pay down the interest they have accrued, which means that their future payments will be applied directly to the principle balance. This helps them get a jump start on effective payments and lowering the overall loan amount.
2. Automatic debit is your best friend.
Many loan providers are now offering automatic debit deductions each month as a method of payment. This comes with a lot of perks. For one thing, your payments will never be late, because they are automatically made every month on the same day. For another, you can usually get an interest rate reduction of up to 0.25%. This means that you’ll never default on your loans, and you are saving yourself more money in the long run! See if your loan provider offers this option!
3. Consolidation could save your life.
Student loan consolidation is becoming rapidly more popular in the student loan world, taking all of your debts and rolling them into one, nicely organized loan. Your interest rate will become one fixed number, probably the highest of the bunch, and your total loan amount will look a lot higher (one big number instead of lots of little ones), but ultimately, this can be a huge stress relief, and can end up saving you money if you do it right.
4. Your job might get you out of paying.
Public service jobs have a pretty good trade off for ridiculously high loan amounts: 120 on time payments have to be made, but then the remaining debt is wiped clear. If you have debts in the hundreds of thousands, this can be a life saver. You have to pay consistently for 10 years, but you only have to make your minimum payments, and then, in some cases, the debt is erased. What a relief!
5. Buy yourself time.
As always, if you are absolutely drowning and can’t afford even your minimums, you can file for deferment or forbearance. Pushing back your loan payments means you have a bit more time to get your finances in order and come up with a game plan for effectively paying down your loans. There are a lot of stipulations with this, so make sure you do this as a last resort, but it can be a huge help to people who are really struggling.
6. Budget, budget, budget!
Always work out a game plan at the beginning of each month with your money. Make sure you always have enough money to pay your loan payment, and work down from that: loan payment, bills, savings, fun money, etc. Never having to second guess whether or not you’ll be able to make a payment will save you loads of stress.
7. Stay up to date.
Check your online student loan account at least once a week. Keep paper copies of all payment receipts somewhere easily accessible and well organized. Know when your last payment was and when your next one will be. Keep an eye on your interest rates, because sometimes they’ll change on you. Some providers will consolidate your interest suddenly, and your principle balance will go up. Knowing what’s happening while it’s happening is a lot less stressful than logging in once a month and being constantly surprised.
Just doing these few things will help keep your repayment process relatively stress free and manageable. Being in control is much better than feeling out of control!
About the author
Trinya’s passion for helping others understand student loans started when she began learning all she could to fill in what she didn’t know about her own loans. She enjoys speaking at local schools about the cost of college and assisting friends with their finances. In her free time, Trinya also enjoys reading, writing, and playing music.