When a student graduates from a college, it represents a major accomplishment in life. For some graduates, this represents the start of a tedious, stressful process of financing your student loan.
The student loans can quickly be forgotten when a person is celebrating his/her graduation and looking for a job but it is important to come up with a plan, not after graduation but preferably before on how the student loan you have will be financed. Do you sometimes think about student loan refinancing after graduation?
Below are some of the tips you can use.
1. Understand your loan inside and out
Before you start the process of loan financing, it is important to know how much you need to pay. Log into the system and review the total amount of student loan disbursed to you. Be updated with every type of loan you have whether federal or private. Knowledge is power as they say.
Different loans come with different grace periods. This is the period which you are given before you start paying your first instalment.
Have this knowledge and understand the duration that applies to you since they vary depending on whether you are a private student or not and the financier.
3. Pick the right repayment option
Decide on whether you are comfortable with the standard repayment plan. A student can choose to select income driven payment plan where you pay as you receive your income. This can be available for federal loans and not private loans. It is important to note that the higher the repayment period, the higher the amount being paid as interest.
4. Stay away from trouble
It is important to understand the repercussions of defaulting. Check out on the income-based repayment plan if your income is not a constant flow.
Some of such grave consequences are
- Your credit scores being ruined.
- The total amount you owe increases drastically
- The government can seize your tax refund.
5. Consider prepaying if you can
If you have the financial ability, consider the prepayment option since this lowers amount of interest charged on your loan. You can always deposit extra payment anytime you have cash.
6. Paying off the most expensive loan first
For the students who have to service more than one loan after graduation, it is important to consider finishing the most expensive loan first. If you have private loans together with the federal loan, pay the private loan first since they typically carry higher interest.
In conclusion, as a student not yet graduated, it is important to think about student loan financing after graduation when still in college. For people who are already financing their student loans, treat your investment as tax, utility bill or a monthly cost that you can’t avoid because going into a default has serious consequences.