Know what your loans and grace period are. At all times the lender, balance, and repayment plan should be on hand and accessible. These things let you know your different options for loan repayment and possible loan forgiveness.
If you go to nslds.ed.gov, all of your federal loans should be shown to you. Note that private loans will not show up on this, so it’s important to keep track of this data on your own. It’s easy to get behind in paying, so being organized will help.
Next, take into consideration which repayment option best suits you. The loans automatically start based on a ten-year plan. This means that after you graduate, there’s a regimented plan to follow. It’s important to be honest with your situation. If this is going to be difficult to keep up with remember there are other options. You may pay increased interest, but spreading out loans over ten years may not work for some. Extensions may be needed. However, usually this causes the interest to spike, so be cautious.
There are also several different methods to go about when deciding which loans to pay first. There are different federal loans and hundreds of private loans out there. If there’s time to choose which loan you want to pay off first, the general rule of thumb is to start early on the loan with the highest interest. These are the loans that will accumulate the most money, so the quicker they’re paid, the quicker they’re gone.
This being said, start paying loans off as soon as you can. If it’s possible to pay a loan before it’s technically due you should. This will save money on interest rates and put you out of debt sooner. Utilizing money while you have it will help. Especially if you’re in college with extra cash. Starting to pay off a loan will help more in the long run than buying the little things like a Starbucks iced coffee every day.
That being said, don’t think you can get away without paying. Putting loans off and refusing to pay at all will result in a monetary disaster. There’s a nine-month leeway, but after those months are up the total loan is due. This causes havoc on your credit score. Then, as if things couldn’t get any worse, your total amount due is increased substantially.
As if this isn’t bad enough, for private loans, generally speaking, it’s worse. For private loans a cosigner is often required, and not only will this put your credit history down the drain, it will also impact the cosigner’s.
If this even has a chance of happening, it’s best to handle it right away. Talk to the lender and see what can be done. Sometimes accommodations can be made such as deferments. It’s possible to defer the loan for a little bit if you need to get on your own two feet again. For example, if you lost a job there is a way to put a hold on loans until you can be successful with your finances again. Granted, there is no permanent deferment, but temporarily it will work.
Lastly, don’t forget about loan forgiveness. For extreme measures loans may be written off. Again, this is usually only for certain situations, but it is possible.