Managing Student Loans

The majority of student loans don’t become payable until the six month grace period following graduation is complete. Subsidized student loans don’t accrue any interest during college days but unsubsidized loans attract interest from the date of disbursement. Whilst many students take the option of deferring repayment of this interest until the repayments fall due, by paying it during the college days the overall cost of the loan will be less.

Those who graduate with employment prospects have an excellent opportunity to start to tackle their student debt aggressively right away, before other financial obligations become a fixed part of life. If you can save money by moving back home and retaining the frugal mentality of a student then this is the best opportunity you have to overpay your student loans early, thus decreasing the overall debt burden by reducing the principal. One can never foresee future circumstances, thus clearing the loans off as quickly as possible is the wisest route to prevent student loan debt becoming a millstone around your neck.

Start by making automated direct payments to your loans for the regular monthly payment and take the loan with the highest interest rate and overpay the principal on that loan first. This can commence either whilst in college or when the payments fall due after the grace period, but summer jobs whilst in college are an excellent way of funding over payments.

There are some excellent student loan repayment schemes operated by both the federal and local state governments so research which programs may be applicable to your skills and needs. Programs for post graduate entrants such as vets and dentists offer excellent opportunities to repay debt as offer generous payments towards the loans. Other programs are available to those who work in the medical field, social workers, teachers and lawyers. Check for information on both federal and state programs early as the programs are both popular and oversubscribed.

Volunteer programs such as those run by AmeriCorps for Peace Corps volunteers and voluntary service in America pay a living stipend and then provide a lump sum towards repaying student loans, which are excellent for paying off a large chunk of debt in one fell swoop. These types of program offer a chance to gain invaluable experience which can enhance your employment prospects.

When you graduate from college make it known that you would prefer cash to put towards your student loans rather than gifts. Every little helps and it will soon become apparent that student debt is a matter to take very seriously.

There are far too many instances of loans increasing to unmanageable amounts with accrued and compounded interest. Loan debt can increase two or three fold if it is not tackled correctly from the outset and many graduates suffer financial hardship from letting their debts reach unmanageable levels. The best approach is to never borrow more than you absolutely need and have a concrete plan in mind for dealing with it.