Happy Graduation! Time to Repay Your College Loans
Graduating from college is an exciting time for many, and can signal the start of student loan repayment. If you are a recent graduate, it’s possible you had a co-signer on your student loan. If you are a parent or family member that is a co-signer, there’s no better time than now to formulate a plan with the graduate to pay the loan off quickly. Monthly loan payments are scheduled with minimum payments in order to make the lender money, and cost you more in interest. Here are some tips to help you start your repayment process:
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 the amount you borrowed.
Don’t ‘Defer’. For those that think deferring payments until their income is larger, think again. It’s a fact that student loan debt is still a part of your financial picture and will affect your credit score. If you are considering purchasing a new car or home in the next few years, deferring payments can hinder those plans.
Examine All ‘Consolidation Offers’. There are lending companies that present a better rate, but can lead to complications on paying off your loans, escalating interest rates as the note matures, and refinancing options through another lender impossible. Make sure you read the fine print!
Understand the repayment options and terms. Set a goal for repayment of the loan that is earlier than the payoff date. Save interest and help your credit score by making your payments in full and by the due date since late fees can add up. Contact the lender for any question you have on repaying your loan.
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 mortgage debt 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. Making the decision 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.