The Do’s and Don’ts of Student Debt Management

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Unfortunately, most college students need to take out one or more student loans to pay for their education.

Let’s face it, not many students can afford to pay around $45,000 upfront for a college degree, especially if they’re studying full-time and have only limited part-time income.

Most student loans have a deferment period so that students don’t need to make payments while in college and this also stops interest which is accruing being added to the principal loan.

However, once you’ve left college and start to look for a job, this grace period will expire and all of that accrued interest will be added to the original loan amount.

Managing this debt can be difficult, but here are some do’s and don’ts to make paying off student loans after graduation easier.

 

Do Make a Plan for a Good Repayment Strategy

If you have a Federal student loan there are eight types of repayment plans available through the Department of Education’s Federal Student Aid.

It’s a great idea to check out their website to see exactly what kind of assistance you qualify for, depending on your personal circumstances.

One excellent strategy for getting on top of your student debt is to pay off the smallest loan first. You can set up a spreadsheet listing all of your loans and then add payments as you make them.

This way you can see your debts reducing on a monthly or even weekly basis. This is a good psychological strategy and will make you stick to your payment plan.

 

Do Focus on Paying Off Your Debt Rather than Improving Your Lifestyle

Once you’ve landed that first exciting marketing job after graduating from your online bachelor of science in marketing, it can be tempting to start spending all of that extra income on improving your lifestyle. You know, like buying a new car or moving to a more expensive apartment.

Try to avoid doing this until you have your student debt under control. Focus instead on your loan repayment plan and then give yourself little rewards each time you pay off a loan. This means you’ll be debt-free much sooner than you think.

 

Don’t Default on Any Student Loan

After you’ve graduated from your online marketing degree and landed that first job it’s absolutely essential that you start to make payments immediately. Don’t just ignore that loan debt as it will not go away!

Defaulting on loan payments can have some very serious consequences such as the garnishing of your wages, a bad credit rating and the inability to apply for further deferments or more credit in the future.

 

Don’t Consolidate All of Your Loans into One

This may sound like a good strategy as you only need to make one loan payment each month, but it limits your ability to pay off smaller or high-interest loans faster. Consolidating loans should really only be considered as a last resort if paying off your loans becomes unmanageable.

If you follow this advice and make a good repayment plan and stick to it, remembering to pay off smaller or high-interest loans first, you may find that you can pay off all of your student loans within 1 to 2 years.

This will not only leave you debt-free and able to enjoy your new lifestyle, but you will also have established a good credit rating, which will be invaluable in the future.

 

Are You Dealing with Student Loan Debt?

So what are you’re thoughts, do you have student loans and are you looking to for ways to pay them off faster?  Share your thoughts on how you are dealing with these kinds of loans and what worked and what didn’t work.

I look forward to reading your comments and replying.

Cheers!

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