8 Simple Steps To Reduce The Financial Burden Of Your ...

8 Simple Steps To Reduce The Financial Burden Of Your Student Loans · 1. Pay What You Can Afford, Monitor Your Finances and Be Accountable · 2. LifestyleByAaronKaufmanApril28,2014Withcommencementseasonfastapproaching,collegeseniorswillsoonbeswappingtheirbookbagsforbriefcases.Unfortunately,thesesoon-to-begraduatesareleavingcampuslifebehindandenteringthe"realworld"ataparticularlytryingtime.Withathirdofindividualsaged25to29holdingatleastabachelor’sdegree–ahigherpercentagethanthetotaladultpopulation–MillennialsareontracktobethemosteducatedgenerationinUShistory.Yet,studentswhoborrowedmoneyforundergraduatedegreesnowholdanaveragestudentloandebtof$29,400,accordingtoanewreportfromtheProjectonStudentDebt.What’smore,71percentofgraduateshadoutstandingstudentloansin2012.Whenyoufactorrisingtuitioncostsintothisequation,it’sunsurprisingtolearnthatoutstandingstudentloansintheUnitedStateshasdoubledsince2007,nowtotaling$1.2trillion,accordingtotheConsumerFinancialBureau.Thegovernmenthasexploredwaystoaddressthisproblemwithnewborrowingfundingmodelsanddebtforgivenessprograms,butthoseeffortshavestalledforthemostpart.Still,youdon’tneedtoconsignyourselftocarryingthatburdensomedebtfordecadestocome.Herearesometipstohelpyoumanageandpayoffthoseloansmorequicklyandsetyourselfonasoundfinancialcourse.1. PayWhatYouCanAfford,MonitorYourFinancesandBeAccountableIt’simportanttoberealisticwhenestablishingapaymentplanforyourstudentloans.Giventhecurrenteconomicclimate,collegegraduatescanexpecttobeunderemployedformanyyearsearlyintheircareers.Whilenotalwaysanoption,itisbesttoavoidtakingoutmoreinstudentloansthanyouanticipatemakinginyourfirstyearoutofcollege.Remember,itisnotuncommontooweasmuchas$12,000peryearonyourloanrepayments.Ifyoudon’tworkwithlenderstocreateacustompaymentschedule,you’lllikelybeenrolledinthestandardpaymentplanthatrequiresyoutomakesetpaymentsthatcanbeashighas$1,000ormoreeverymonth.However,itisimportanttonotethatifyouchoosealowermonthlypaymentrate,youwillenduppayingmoreininterest.Shouldyoudecidetoloweryourrate,besuretocalculatetheadditionalinterestsyouwillowetodeterminewhatworksbestforyou.Todothisproperly,youhavetostayorganized.Createaspreadsheettotrackyourincome,expensesandoutstandingloans.Ifyouhavemultipleloans,organizethembyinterestratesfromhighesttolowest.Usingyourspreadsheet,figureouthowmuchofyourincomeyoucanallocatetopayingoffyourdebtandmakepaymentsonthehighestinterestrateloanfirst.Ifyouhaveoutstandingcreditcarddebt,paythatofffirst.Regardlessofhowhighyourstudentloaninterestratesare,theyprobablydon’tcomeclosetotheinterestthatyouhavetopayonyourcreditcardbill.Whilecreatinganeffectivesystemisimportant,stickingtothatsystemiscrucial.Findsomeone–parent,friend,significantother–whowillhelpyoutrackandsticktothefinancialsystemyou’veimplemented.Beingaccountabletosomeoneotherthanyourselfcangoalongway.2. Don’tUseLoanstoPayforLivingExpensesSomelendersofferloansthatexceedtuitioncoststohelpstudentspayforlivingexpenses,butdon’tbeluredintomakingthismistake.It’sanappealingoptionwhenyouconsidertheadditionalbeer,pizzaandwildspringbreaktripstoCancunthatyouotherwisewouldn’tbeabletoafford,butyouneedtorememberthattheadditionalinterestthatyou’llenduppayingontheseexpenseswillonlyaddtoyourfinancialburden.Instead,trytofigureoutawaytofindawaytobringinsomeadditionalincome.Applytoyouruniversity’swork-studyprogram,bartendorfindapart-timegigflippingburgers.Ifyoufindyourselfwithsomesurplusfunds,usethemoneytobeginpayingoffyourloanswhileyou’restillinschool.Futureyouwillappreciateit.3. AvoidPrivateLendersUnlikefederalloans,privatestudentloanscarryvariablerates,meaningtheinterestandpaymentratesarenotfixed.Whileprivatelendersmightinitiallyofferlowerratesthanfederalprograms,theyareunlikelytostaythatwayoverthecourseoftheloan.Theyalsoofferfewerrepaymentalternativesandnodebtforgivenessoptions.Worse,theyoftenrequireaco-signersincethemajorityofcollegestudentsdonothavetherequisiteemploymentorcredithistorytosecuretheloansthemselves.Moststudentsturntotheirparentstoco-signtheseloans,meaningtheircreditwouldbeimpactedifyouendupdefaultingonyourpayments.Worse,theConsumerFinancialProtectionBureaureleasedareportTuesdaythatwarnsofanoftenoverlookedprovisioninprivateloancontracts.Thisprovision,accordingtotheNewYorkTimes,meansthat“Iftheco-signerdiesorfilesforbankruptcy,theloanholdercandemandcompleterepayment,eveniftheborrower’srecordisspotless.Iftheloanisnotrepaid,itisdeclaredtobeindefault,doingdamagetoaborrower’screditrecordthatcantakeyearstorepair.”Ifyoudohaveprivateloans,focusonpayingtheseofffirstwhileonlymakingminimumpaymentstowardsyourfederalloans.Andneverconsiderconsolidatingfederalloansintoprivateloans.Ifyoudo,you’llstandtolosetherepaymentoffersandborrowerbenefitsthattheyoffer.4. It’sNeverTooLatetoFindGrantsandScholarshipsYoumighthavesoughtouteveryscholarshipandgrantyoucouldfindwhileyouwereapplyingtoschool,buthaven’tconsideredcontinuingthehuntsincearrivingoncampus.Lookforscholarshipopportunitiesprovidedtostudentsinyouracademicfieldorthroughextracurricularorganizationsthatyoubelongto.Talktofinancialaidadvisorsatyouruniversitytodeterminewhatscholarshipopportunitiesmightbeavailabletoyou.Anyadditionalmoneythatyou’reabletoprocurecouldgoalongway.5. TakeAdvantageofLoanForgivenessProgramsPerhapsthebestwaytopayoffyourstudentloansquicklyistonothavetopaythemoffatall.Thereareanumberofforgivenessprogramsthatyoumightbeabletoqualifyfor.OneofthebestoptionsistheUSDepartmentofEducation’sPublicServiceLoanForgiveness(PSFL)Program.ThePSLFProgramisdesignedtoencouragepeopletoworkfull-timeinpublicservicejobs.Bydoingso,individualscarryingstudentloanscanqualifyforforgivenessoftheremainingbalanceoftheirloansaftertheyhavemade120qualifyingpaymentsonthoseloanswhileemployedfull-timebycertainemployers.Thesepublicserviceprofessionsincludeanythingfromfederal,stateorlocalgovernmentjobstonon-profits.TheConsumerFinancialProtectionBureauestimatesthatasmanyas33millionAmericansmightbeeligibletoqualifyforPSFL,sothere’sagoodchancethatyoumightbeoneofthem.SojointhePeaceCorps,TeachforAmerica,theMilitaryoraresearchinstitution.Evenifyouaren’tworkinginthepublicservice,therearestillplentyofopportunitiestotakeadvantageofloanforgiveness.Securingthemcanevenbeassimpleasmovingtoanewtown.SALT,afinancialresourcewebsitecreatedbythenonprofitAmericanStudentAssistanceorganization,foundthattherearemorethan60differentstudentloanforgivenessprogramsthatcouldpotentiallyabsolveyourtotaldebt.AsBetsyMayotteofSALTputitinanarticlesheauthoredfortheChicagoTribune:“Doyouworkinhealthcare?MovetoanunderservedareainCaliforniaandreceiveupto$160,000instudentloanforgiveness.Lovetoski?Coloradowillpayhealthprofessionalsupto$105,000forthreeyearsofservice.Dentistscansignupforanadditionaltwoyearsforanother$50,000.Likecows?(Andwhodoesn'tlikecows?)ThestateofKentuckywillpay$6,000ayeartowardsyourstudentloansifyoucometoworkasavetandspendatleasthalfyourtimeworkingwithlargeanimalsorthoseusedforfood.”Onethingtoremember:evenifyoureceivedebtforgivenessthroughoneoftheseprograms,theloansforgivenmightstillbetaxableasincome.6. MakeBiweeklyPaymentsIt’sawell-knowntrickforreducingmortgagepaymentsbyafactorofseveralyears,butitcanbeappliedtostudentloansaswell.Bymakingloanpaymentsonabiweeklybasisinsteadofmonthly,youenduppayinglessininterestasthereislesstimebetweenpaymentsforinteresttoaccumulate.Additionally,bycommittingtopayingeverytwoweeksinsteadofonceamonth,youendupmakinganadditional26paymentseachyear.Thismeansyou’rethatmuchclosertoriddingyourselfofthoseonerousloansaltogether.7. TakeAdvantageofTaxBenefitsTalktoanaccountant.Whentaxtimecomesaround,youcandeducttheamountofinterestthatyoupaidinstudentloansandreceivequiteasizablereturn.For2013,individualscoulddeductupto$2,500orthetotalamounttheypaidinstudentloaninterests.Essentially,thisoptionaffordsindividualstheopportunitytonegatemuchofthetotalinteresttheyaccumulateonloanseachyear,makingiteasiertodrivedowntheiroverallloandebt.8. BeWillingtoMakeSomeSacrificesAlltricksandtipsaside,thebestthingthatyoucandoforyourselfwhentryingtoclimbfromtheabyssofstudentloandebtistobewillingtomakesomesacrifices.Frugalityiskey.Eatoutless,optforlessexoticvacationsanddon’tmakeanyextravagantpurchases.Ifyou’regoingoutfordrinks,considerhidingaflaskinyourjacket.Choosetocookathomeinsteadofgoingtoarestaurant.Remember,apennysavedisapennyearned.Oratleastapennythatyoucaninvestinriddingyourselfofstudentloandebt.PhotoCourtesy:TumblrMorelikethisWhat'sInDisney's$5KCocktail?The'StarWars'-InspiredKaiburrCrystalIsLuxeByRachelChapmanHere’sHowStudentLoansAffectYourCreditByRhymaCastillo11TrendingTikTokSongsAndSoundsToTryWithYourSummerSquadByOliviaCiglianoDon'tmissathingBethefirsttoknowwhat'strending,straightfromEliteDailyI’dalsoliketoreceive:UpNextSubmitSearchCloseExperiencesTravelAstrologyHealthSocialMediaLivingSeeAllNewsPoliticsTechFoodTrendingSeeAllStyleFashionBeautyCelebStyleSeeAllDatingSingleLifeRelationshipsSexCelebrityCouplesSeeAllEntertainmentAmplifyingOurVoicesTVMoviesCelebrityMusicSeeAllAboutUsArchiveAdvertiseTermsPrivacyDMCANewsletterMasthead©2022BDGMedia,Inc.Allrightsreserved.