Paying Off Student LoansCollege Planning Insights
You've graduated from college and are just starting your new career. Your student loans are also coming due. While the ultimate goal is to get them paid off in a timely fashion, there are a few things you need to consider. Privately funded student loans can be costly to repay, but federal student loans can actually be a beneficial tool when it comes to learning how to efficiently manage your finances.
Pay On Time
Always pay your bills on time. If it helps, set an alarm to remind you the week before it's due. If you get in the habit of paying your loan a week before it's actually due, you won't be late. And even if you forget, you will have a few days to pay it before it's late. Because federal student loans are reported to the three credit bureaus, you can begin to watch your credit improve if you monitor your credit or FICO score.
Build Good Credit
Federal student loans typically have a low or moderate interest rate. They also report to all three credit bureaus. Once you graduate and establish your repayment plan, you can begin to pay off your loans and build your credit. For some, a student loan may be their first experience when it comes to loans and paying bills on time. Most lenders work will work with you as a new graduate, creating a payment plan that is both affordable and manageable.
Maintain Your Student Loan and Pay Off Other High-Interest Debt
If you find yourself with a higher debt to income ratio than you're comfortable with, you can pay extra on other types of high-interest debt. Instead of adding more money to your student loan payment, consider putting it towards your credit cards or other loans that have higher interest rates. Continue to maintain your student loan paying the monthly payment or slightly more, but by paying off your credit cards, you will pay less in interest and be able to better manage your credit card debt. Your student loan rates won't change like those associated with your credit cards, so it may be a good idea to double up payments on your credit cards or other loans.
Get Professional Advice
A Financial Planner can help you develop a strategy to handle debt proactively. Many life events, such as getting married, can alter the payment plans that are set up on Student Loans, make sure you aren't surprised by a change. Loan repayments are huge part of everyone's financial narrative, and taking a proactive approach to this area is a great way to start taking control of your financial narrative.
Taking time to pay off your federal student loans gives you an opportunity to establish the credit you will need for other important life events, such as buying your first home or car. They also give you an opportunity to learn how to manage your finances in a way that will last you the rest of your life.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.