The importance of education cannot be understated. Each year, hundreds of thousands of new students enter college or university in an effort to advance their education. Regardless of age, learning style, or major, these students have at least one thing in common. Student loan debt. More than ninety percent of college students take one or more loans during their college career. Paying off student loans can seem to take forever. Here are a few ways to reduce the burden sooner.
Keep Good Records
Student loans can come from many different sources and are usually issued each semester. Federal student loans, state subsidized loans, school funded loans, and private institution loans add up quickly. Keeping track of the source of all funds can be tricky, but it is important to know exactly how many loans were issued and when each one becomes due. Typically, loan payments become due in the same order in which they were disbursed. Focus on the oldest loans first to avoid paying additional interest from aged loans.
Consider Refinance Options
Upon graduation, students have the option to consolidate multiple loans into a single loan. The process of consolidation makes monthly payments easier to manage and could reduce high interest payments. Before entertaining a consolidation offer, review the interest rate for each underlying loan. Also confirm when payments are scheduled to begin and when interest begins or began accruing on the original loans. Consolidating too soon could result in paying interest on loans before it would have been due. Calculate offers carefully before deciding whether to refinance and consolidate education debt from multiple lenders into one.
Structure a Repayment Schedule
Most lenders create repayment plans that span over a ten year period. Depending on the size of the debt, the estimated repayment term could be longer or shorter. Begin making payments as soon as possible, and get in the habit of paying a little extra each month. Paying before the due date and paying more than the minimum due are easy ways to quickly reduce the principle balance. Confirm with the current lender how overpayments are applied to the account. Some are automatically applied to principle while others simply advance the new payment due date.