Ballerific Finances- Paying Off Student Loans Without Going Broke

According to the Consumer Financial Protection Bureau, student loans are the largest form of consumer debt, other than mortgages. In the United States, students are approximately $1.2 TRILLION in student loans. Some students tend to ignore the loans completely believing that they will disappear on their own, whilst more and more students are struggling daily just to live and be able to pay off their student loans. There are many ways to pay off your student loans without going completely broke. Implementing a few of the following steps will assist with paying off your student loans in a timely manner.

1. Only borrow what you need!

A lot of students get caught up in the fact that with most colleges and universities will allow students to borrow over the amount needed for tuition, books and supplies, and housing. In fact, most students will borrow the maximum amount available to them not realizing that they have to pay every penny back, with interest. By taking out only what you need, you will save yourself the hassle of having to pay back money you didn’t need to finish your education in the first place.

2. Don’t ignore the debt!

While it may be less stressful to go about your day as if your student loans never existed, the US government is not that charitable. Ignoring your student loan debt will only put you deeper and deeper down the hole, making it almost impossible to pull yourself out. Your best bet is to attack this beast head on in order to dodge the consequences later.

3. Keep your information updated!

Not receiving your student loan documents is NO EXCUSE for not paying them off. Just as a judge will not accept ignorance of the law as a defense, the government (and your credit) will not accept never receiving the information to pay in the mail as a valid excuse for not paying on your student loans. The best thing to do is when moving or changing your email address and or phone number, make sure to contact your student loan holder and advise them of the changes so that when it is time for them to contact you with important information regarding your loans, you will receive the information.

4. Start paying loans off immediately!

With government student loans, you are given a 6 month grace period after graduation in order to begin making your payments. Within those 6 months, you are still incurring interest in the loans that you took out. I recommend beginning to pay off your loans immediately. I’m not saying attempt to pay off your entire balance, but whenever you have extra money available put it towards your loans to avoid paying thousands of unnecessary dollars in interest.

5. Read the fine print!

Most college students will sign a paper to receive money, but will not actually read what terms and conditions they are signing up for in the process. Before taking out your student loans, it is best to read the fine print to ensure you are well prepared for the interest rates your loan has, the time frame in order to pay it back, and the penalties for not paying back your loans. Even if you do not take the time to read the terms and conditions, you are still held liable for the loans and all disclaimers made in the fine print.

6. Negotiate!

Some employers will allow you to trade in a higher salary for a monthly or one-time stipend to go towards student loans. It is important to remember this while interviewing. On one hand, you can have a larger salary where you can spend your money any way that you would like; and on the other hand, although you do not have a huge salary, you have the peace of mind each month that you know your student loans will be taken care of.

7. Payment plans!

By visiting www.studentaid.ed.gov you can see an array of payment options available to you in order to repay your government student loans. There are 3 common repayment plans which include: deferment, IBR, and forbearance. Deferment allows you to have a temporary suspension of your student loan payments and interest; IBR(Income based repayment) allows your monthly payments to be calculated solely off of your monthly income-this may cause you to pay your student loans over a greater amount of time and pay more into interest; Forbearance allows you to have the same temporary suspension of student loan payments, but your interest still aggregates every month( I do not recommend this option unless it is a last resort as you will pay heavily in interest)

Paying off student loans doesn’t have to be a hassle. With the right planning and budgeting anyone can pay off their student loans within 5 years with the right discipline. In the end it’s all up to you.