Whether you’re just starting college and want to minimize your future debt or already dealing with loan payments, understanding how to best manage this type of debt can help ease the burden. With the right strategies, you can manage your student loans and even pay them off faster than you thought possible!
Here are 5 tips for managing your student debt:
1. Planning
One of the most effective ways to manage student debt is to create a plan that outlines how you are going to manage your expenses and income. For those with student loan debt, a good plan includes tracking income and expenses in order to determine how much can be allocated towards loan repayment each month. This also involves setting spending limits, avoiding unnecessary purchases, and exploring options to increase income such as taking on part-time jobs or freelance gigs that do not take away from study time.
2. Refinancing
Student loan refinancing involves the consolidation of existing loans into one loan with lower interest rates. This can help reduce monthly payments in the long run. Refinancing has increasingly become an attractive option for many borrowers, as interest rates have been decreasing over recent years. However, it’s important to note that borrowers should have reasonably good credit scores and have no negative marks on their credit history before applying for refinancing.
Borrowers often take out student loans when they are just starting out with limited credit history. When they refinance those same loans with a lower interest rate, they are demonstrating responsible management of debt which can have positive repercussions for their credit score over time.
3. Government Assistance Programs
Another way for borrowers with federal student loans to manage their debts is by enrolling in government assistance programs. Income-driven repayment plans or deferment/forbearance options may provide reduced monthly payments based on income levels and financial circumstances. Borrowers should check their eligibility for these programs prior to making a decision but should keep in mind that these are only available for federal student loans and not private ones.
One of the most popular options is the Income-Based Repayment (IBR) plan, which allows borrowers to cap their monthly payments at an amount that is considered affordable based on their income. Under this plan, payments will never exceed 10% or 15% of the borrower’s discretionary income, and remaining debt after 20-25 years will be forgiven. This makes it easier for students to keep up with payments even if their wages are low.
4. Employer Assistance Programs
Some employers offer assistance programs designed especially for employees who are repaying student loan debt. These employer contribution programs can provide help in a variety of ways, from helping to make loan payments, to providing access to refinancing options. Some companies have even gone so far as to offer full payment of student loans after a certain amount of time or number of years spent with the company—a particularly attractive option for recent graduates looking for job stability.
Employers can often negotiate special discounted rates with banks and lenders on behalf of their employees, allowing them to take advantage of better terms than what might otherwise be available. They may also provide access to financial advisors and counselors who can assist with budgeting and creating a plan for managing debt over time.
These employer contributions programs are becoming increasingly popular among employers and employees alike. They can provide much needed relief from the burden of student loan debt while also providing additional incentives and benefits that may encourage employees to remain loyal with the company. It’s worth taking the time to research what types of programs your company offers so that you can get some assistance with managing your debts in an affordable way.
5. Saving Money
Borrowers should also look at other practical ways to save money when managing their debts such as living frugally, searching for discounts when making purchases, using public transportation instead of relying on cars. All of these expenses may seem small, but they can add up quickly and make a big difference when it comes to managing student liabilities over time.
If you’re a current student, take advantage of free resources that are available on campus or in the community. Ask for student discounts at restaurants or at stores. Any savings you can achieve now will help you save some extra cash to handle those student loans down the road.
With careful planning and taking advantage of resources, you can make sure that your student debt does not become unmanageable or crush your future financial goals. By taking a proactive approach and staying organized, you’ll find that managing your loan repayment is much easier than expected.
Ready to start owning your financial future?
Remember, it is important to be in the right money mindset before taking on a student loan! Check out our Money Coaching Online Courses to increase your financial literacy. If you need further help managing your student debt, check out our Knock Out Debt Online Course!
