Tips for Paying Off Student Loans

Tips for Paying Off Student Loans Know Your Loan If you want to pay off your loan, you need a few pieces of information to get started. These include: The amount you owe Who your loan is with The interest rate on the loan Related Articles Direct Student Government Loans Direct Student Government Loans How to Get a Student Loan Deferment How to Get a Student Loan Deferment Paying Off Debt Vs. Saving Money Paying Off Debt Vs. Saving Money Find out this information for every loan you hold. It's possible that what you think is one student loan is actually held by different lenders. Sometimes lenders can also sell your student loans to other lenders, so you'll want to stay on top of who currently holds your loan. Typically the lender will send you a letter to notify you of the change. Understand the Terms Learning about your loan also involves understanding the terms of your loan. You'll need to know: When you have to start paying back the loan How long you have to pay back the loan Your interest rate and whether it's fixed or variable Most student loans require students to start repayment six months after graduation, and generally, students have 10 years to repay the loan. However, this may not be the case if you have a private loan. Sometimes you'll have the option to pay back your loan over a longer period, leading to lower monthly payments, but holding the loan over your head even longer. Consolidating Your Loans Consolidating your student loans allows you to combine two or more loans into one payment. It may also give you the chance to lower your interest rate, which can be particularly helpful if you have a loan with a variable interest rate, or one that can increase over time. If you decide to consolidate your loans, you'll also get a chance to look at different repayment plans, including income-based repayment plans and graduated repayment plans where the monthly payment increases over time. Deferment or Forbearance Putting off paying your loan with a deferment or forbearance may not seem like an ideal way to start paying it off, but it could buy you some time to get your affairs in order. A deferment allows you to temporarily stop making payments due to factors such as the inability to find full-time work or in case of another financial hardship. Forbearance also allows you to stop making payments or reduces the amount of your payments for a year due to financial hardship, illness, or if your student loan payment equals more than 20 percent of your gross income. In most cases your lender must decide whether to grant you a deferment or forbearance.