Best Ways To Navigate Your Student Loan Payments

4 mins read
Student Loan
Student Loan

If you’re a student, you probably have at least one student loan payment to navigate. The amount of time between graduation and your first full-time job can be daunting especially when it comes to paying off that debt. But don’t worry! You’ll get some tips here for making the best of your situation and getting rid of that pesky student loan as quickly as possible.

Refinancing your student loans

Refinancing your student loans is a great way to lower your monthly payment or interest rate, or both. Refinancing simply means that you are taking out a new loan from another lender and using it to pay off your existing student loans. This can be done for private or federal student loans, though not all lenders will offer the same rates and terms on both types of loans.

One should keep in mind the average interest rate on student loans. As professionals like Lantern by SoFi noticed, “The average student loan interest rate, federal and private, of 5.8% in 2022 is historically quite low.”

The benefits of refinancing vary depending on the type of refinancing you choose. Some people choose to refinance only because they want to get rid of high-interest debt while others may be looking for more specific benefits like reducing their monthly payments. 

Income-driven repayment plans

Income-driven repayment plans are a great way to lower your monthly student loan payment if you’re working in a low-paying field or have struggled to find employment after graduation.

To apply for an income-driven repayment plan, contact your loan servicer. If you’ve already been making payments on an income-driven plan and want to change your repayment plan, contact your loan servicer again. To get out of an income-driven repayment plan, contact them again.

Order of payments

It is best to pay the highest interest rate first. This will save you money over the life of the loan. If you have multiple loans with varying interest rates, your next step is to determine which loan has the longest term left on it. If there are two or more such loans, then compare their monthly payments and choose the one with either a lower monthly payment or a lower total balance after that length of time (or both). Start paying on that one immediately.

The final step is determining whether a longer-term loan has been refinanced with a shorter-term one; if so, make sure that any remaining payments go toward paying off this short-term refinance first before moving on to its longer-term counterpart(s).

Pay off more than you are required to pay

Paying more than you are required to pay on your student loans is a great way to get them paid off faster. The more you pay, the less interest you will pay and the faster your loan will be gone.

With this method, it’s important to make sure that you don’t skip payments on your other bills just because you’re paying extra towards your student loans. That could lead to late fees and other penalties that would actually end up costing more.

For the most part, you should be able to navigate your student loans on your own. If you are struggling with this, consider talking to someone who can help you make sense of it all. This could be an accountant or financial planner but also a friend or family member who has experience dealing with debt repayment. You should always pay as much as possible towards your loans each month so that they are paid off faster.

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