The day you graduate from your school is surely one of the rosy days in your life. It calls for celebration as getting a degree will open up a sea of opportunities to help you find your foothold in the job market. However, once the celebration is over, realization dawns upon you that there is a lumpy sum of student loan to pay off. As the payment could be dragged for a long time, most of the students feel restless when the ‘pay off’ period takes off.
I had a comparatively small amount as student loans – only $15,000 – after my graduation. However, it demanded a lot of hard work, discipline and dedication from my end to clear the debts. If you make a wise decision and stick with your way of loan repayment planning, it won’t be hard for you to manage your loan even if it is more than what I had. Here are four simple steps for you to follow:
You should have a clear hang of your student loan
I think you did not get into the details of student loan when you took it out. Now when time comes for repayment, you need to revisit ins and outs of your student loan. Most of the students don’t find it important and opt for minimum payment. I will suggest that you should get the idea about the lender, status of loan and balance of each of your loans if you have borrowed more than one.
I do think that grace period – the time gap between you graduate from school and repayment period starts – will be fine to gather all these details.
Make a repayment plan
Without a plan in place, you will head nowhere. This is the most crucial part of loan repayment process. Every loan has a certain time period of pay off. You need to decide if it is possible to clear the debt within this time frame. I know it is really hard to figure this out when you are yet to land in a job or have just started. However, you need to be as pragmatic as possible. If you find it difficult to clear loan in time, there are options such as debt consolidation to facilitate payment.
All loans don’t attract same interest. Usually private loans have more interest if compared with government loans. If you have multiple loans, you need to make a list of priorities about which ones should be cleared first. I will advise you to start with private loans.
More payment will be a good idea
If you can flex your financial muscle, pay more than minimum amount. This way, you will be able to reduce interest on the loan as time of repayment will be shorter. What is more, you will get rid of financial slavery earlier. Whatever the situation is, getting at top of your loan status is most important.
Having the right mindset is what will see you bid adieu to your debt burden. Failing to pay off student loan will give you a hearty slap of severe consequences. That is why, a strong frame of mind is most important to ease off and ultimately, shrug off the burden of your debt.
Article contributed by,Tina Roth who is a personal finance blogger at PRO Finance Blog.