[Tips & Tricks] Student Loans

So today I had my student loan exit counseling (just another reminder that graduation is creeping up around the corner), and I started to learn a lot about Student Loans that I probably should have paid more attention to when I was signing off on them. However, I was not unprepared, I'm just simply now a lot more well informed of my loans (and what I have to pay back). And, now that I'm nearing graduation and wishing I had paid more attention and paid back even a little of my loans ahead of time, here is my extensive blog post outlining what you ought to know about student loans and tips to make it a little less stressful when graduation hits you. So first, basics.
  • Stafford Subsidized Loan- This is one of those government loans you probably had to accept at the beginning of each semester. The government will cover the interest on these loans as long as you are still fully enrolled in a university. They will start collecting interest at about 3.86%.
  • Stafford Unsubsidized Loan- This government loan is another one you probably had to accept at the beginning of each semester as well. The government does not cover the interest rate of these loans. During my time, the interest rate accrued was at 6.8%, however most recently it was lowered to 3.86%. So yes, right now, I have accrued over two thousand dollars in interest.
  • Private Loan- This loan is not through the government, but through a private company. My last year of college, I took a loan out with Sallie Mae. You definitely ought to remember going through this since you had to fill out the online work and have someone co-sign it for you. Sallie Mae's disadvantage compared to government loans is its higher interest rate at about 8%. 
Okay, so now that we know the types of loans (at least in my experience, there might be more, but I'm not aware of them), let me explain about paying off student loans. There's essentially a variety of different plans to help you pay off your loans in a timely manner. The government uses Great Lakes to handle their loans, so any payment is done through them just as I make payments through Sallie Mae. After you gradate you will have a six month grace period before your expected to start paying dues. You can defer for a variety of different reasons (enrollment in a graduate fellowship or a post-secondary program, economic hardship, inability to find full-time employment, etc) for a certain amount of time, however you will still accrue interest. That being said, these are the different repayment programs as I was told:

  • Standard Loan: You will pay a fixed amount for up to 10 years. Payments are at least $50 a month. Mine worked out to be around $300 a month for my government loans and about $220 for Sallie Mae. 
  • Graduated Repayment Plan: You will start out at a low monthly payment and your dues will increase every two years. You will ultimate pay more in the end, but it's good for when you start out at a low income rate. For 10 years, my dues would go from around $120 to $500.
  • Income-Based Repayment: This plan will calculate your income and family size to determine what a good monthly payment for you will be. If after 25 years, you have not finished paying off your loans, the rest will be forgiven. You will, however, wind up paying the most in the end.

Some Tips to Stay on Top of Your Student Loans:
  1. Keep in contact with your loan companies. They can often help you out in terms of making sure dues are in on time. Maybe a car accident leaves money short, they can skip your payment for a month, etc. 
  2. Repayment is Tax Deductible. Yay! A little money back.
  3. Never fall in to Default. Default, or missing payments, will give you a bad credit score for up to a decade.
  4. It's always okay to pay more than your amount due. If you only owe $50 a month, you're allowed to pay $60. I think my counselor did the math and if I paid an extra $30 a month on standard loan repayment plan, I'd cut my time down by 9 months. 
  5. Try to pay during your grace or deferment periods. I should have done this and I didn't. Even if you pay $20 a month to your loan repayment during your undergraduate years, that amount adds up (48 months x $20= $960!) and can at least maybe alleviate some accrued interest. Go to your loan website and look up how to repay (Sallie Mae needs a routing number and a checking account). 
  6. Always start with the higher interest rates. So since Sallie Mae is 8%, it is much smarter to get that loan paid off since it will accrue almost twice the amount my government loans will. 
  7. Budget, Budget, Budget. I'm learning how to do this! Basic budgeting will help you pay off your loans, avoid further deferment and ending up in default. 
  8. Utilize programs like UPromise. UPromise allows you to make money back when you purchase from places with which they are affiliate (just look them up). It has an option where you can set up any money you make back to go directly to paying for your loan. 
And there it is! I'm the kind of person who doesn't like owing people money (much less companies), so I like paying things off as quickly as possible. Good luck with your loans!

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