Monday, March 2, 2015, AM | Leave Comment
If you are like most recent college graduates you probably have student loan debt. Today, 7 in 10 college graduates are graduating with student loan debt.
Student loans are a necessary tool for some students, and for others, student loans helped to ease the financial burden of higher education.
Either way, your student loan payments are about to come due and you need to be prepared.
We put together a list of student loan tips for recent graduates to help keep student loan debt under control.
Know your loans
Do you have federal or private student loans? Both? It is important to keep track of the lender, balance, and repayment status of each of your student loans.
The promissory note attached to each of your student loans contains important information like interest rates, repayment plans, and can even provide details in regards to student loan forgiveness.
If you can’t find the paperwork you signed, reach out to the financial aid office at your school.
Pick the right repayment plan
Federal student loans come standard with a 10-year repayment plan. Private student loans can have variable term lengths.
If the standard repayment plan is difficult for you to manage, you can ask your lender to adjust your repayment plan.
Moreover, you can even refinance and consolidate your loans with a new repayment plan.
Student loan refinance lenders allow you to pick a new repayment plan. Options usually range from 3 to 25 years.
Be aware, if you extend your repayment plan you will likely pay more in interest over the course of your loan.
Pay the most expensive loans first
While this may sound like common sense, at LendEDU we talk with borrowers everyday who don’t know which loans are the most expensive.
In general, you should pay off your student loans with the highest interest rates first. For interest rate information you should check your promissory note.
If you have private student loans in addition to federal student loans you should start by paying off your private student loans first.
In general, private student loans have higher interest rates in comparison to federal student loans.
Furthermore, many federal student loans have built in borrower benefits.
Payoff principal early if you can afford it
When you make a federal or private student loan payments, the payment covers any late fees first, then interest, and finally the principal.
If you can afford to pay more than your required monthly payment each month you can lower your principal.
If you pay down your principal early you will immediately be saving yourself interest.
Most private student loans compound interest daily, by paying off your loans early you avoid compounded interest.
Sign up for auto-pay
Most student loan lenders give discounts if you sign up for auto-pay.
By signing up for auto-pay you are giving your student loan lender permission to automatically bill you for your student loan payment each month.
Auto-pay is a great option because it will ensure that you will make your payment on-time each month.
Making late student loan payments can lead to high late fees and even worse, a negative mark on your credit.
Moreover, if you consistently make late payments you will have a hard time refinancing your student loans.
Sign up for auto-pay and get 0.25% discounts!
Look at student loan refinance
Depending on what type of student loans you have you may want to consider refinancing and consolidating your loans.
Student loan refinance allows borrowers to lower their interest rate on their student loans.
So if you have high interest rate student loans you may be able to save by refinancing.
Student loan refinance rates vary depending on the lender and your credit profile. That being said, if you have a good credit score, low debt, and a strong income you could refinance with rates as low as 1.92%!
Nate Matherson is a Co-Founder & CEO at LendEDU.com! LendEDU is a marketplace for student loans and student loan refinance. LendEDU helps borrowers find the best terms and rates available with one application.