How to Stop Student Loans from Taking Over Your Life
Student loans can be daunting, to say the least. With tens of thousands of dollars borrowed, and ridiculously high interest rates to deal with, some recent graduates are even experiencing mental health issues as a result of their growing debt. Don’t let this happen to you — try these tips:
Before enrolling at a university, consider the price tag. It can be hard to turn down an acceptance to your dream school because of money, but, realistically, it may not be worth it. Some suggest keeping debt in sync with income, which means that total debt at graduation should be less than the borrower’s annual starting salary. So, plan ahead in your chosen career path, and enlist in the help of parents, counselors, and mentors to help you devise a system of determining what colleges are worth their hefty fees, and which fall short. Any scholarships and grants that you receive may significantly alter your decisions — so it’s best to decide after these have all been squared away.
Know what you’re getting yourself into.
There are dozens of different kinds of student loans that you can apply for — and all operate differently. Most allow you to wait until after you get your degree to start repaying, but many will still accumulate interest during these times — and interest rates can vary from extremely low federal rates to close to 20 percent with some private lenders. Borrow federal loans first, since these are cheaper, more available, and have better repayment terms than private student loans. Make sure you know what you owe, what you will owe after interest adds up, and how long you have to pay back your debt before you jump right into the first loan that is offered. You’ll be glad you did in the long run.
Make interest payments while in school.
For most student loans, although you may not have to pay your debts off until after graduation, interest may still accrue while you’re in school. If you can make payments during college to minimize this, it can be a lot easier to pay off your loans later. Setting up automatic debits with your bank account for your student loan payments may also lower your interest rates, saving you hundreds or even thousands of dollars in the long run.
Save money when you can.
If you have some funds saved up in an emergency account, you can resort to these if something comes up and you can’t make a payment on your student loan.
If you’re struggling to pay your loans back, consider refinancing.
This option is becoming more popular and accessible — especially to those with cringingly high interest rates and large loan balances. If you have private student loans, explore your refinancing options — and don’t be afraid to stray away from your current financial institution to do so. Some debtors with steady jobs and good credit have reduced their interest rates by more than half just by refinancing with a different financial institution, which saves you money over time and can significantly reduce your current payments.
Find out if you are eligible for student loan forgiveness.
Loan forgiveness is available for many federal student loan debtors who are struggling to keep up with their payments. Certain professions, like paramedics and teachers, have special programs specifically created to help minimize student loans, and some companies will even allow you to do volunteer work in exchange for covering some of your student debt. Find out if any of these are present in your area, and explore all of your options to get the most out of the opportunities available to you.
You don’t have to regret going to college because you’re drowning in student loan debt. Keep yourself in check prior to enrollment, save up during school, and keep your mind open to new financing options once it’s time to pay your loans back to control your debt stress after college.