Graduation from college is an exciting time for many and signals the start of student loan repayment. If you are a recent graduate, you may have a co-signer on your student loan. If you are a parent or family member that is a co-signer on a college loan, there’s no better time than now to formulate a plan with the graduate to pay the loan off quickly. Monthly loan payments start with minimum amounts to help the lender make money and cost you more interest. Here are some tips to help you create your repayment process:
1. Forget the Grace Period. Immediately starting to pay the loans will save you interest charges which can add up to hundreds of dollars depending on your borrowed amount.
2. Don’t Defer. For those that think deferring payments until their income is significant, think again. If student loan debt is part of your financial picture, it will reflect in your credit score as debt. If you want to purchase a new car or home in the next few years, deferring payments may hinder your plans.
3. Examine All Consolidation Offers. There are lending companies that present a better rate but can lead you to delaying paying off your loans, escalating interest rates as the note matures and can make a better refinancing option through another lender impossible. Make sure you read the fine print!
4. Understand the repayment options and terms. Set a goal for the loan that is earlier than the payoff date. Save interest and help your credit score by making your full payment amount by the due date since late fees can add up. Contact the lender for any question you have on repaying your loan.
5. Be Transparent with Your Lender. If you are experiencing problems making payments in full and on time, contact your lender to discuss options that may help you. Student loans are the second-largest debt that most Americans will have, besides the obligation of a home.
Even if you have student loans and start a new job, choose to participate in your company retirement plan at the contribution amount required to receive a company match. Deciding to not save for retirement until you’re debt-free may cause you to lose out on employer contributions and delay starting to save for your financial future.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
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