Today, getting a college degree is essential for many career paths, but many students can’t afford to pay for their degree outright. Often, students are only able to afford their degree by borrowing money in the form of student loans. Whether you’re in the process of applying to college, mid-way through your degree or have recently graduated and are facing making repayments, the good news is that there are several tricks that you can use to reduce repayments on your student loan or make it easier to manage. These include:
#1. Change Your Spending Habits:
If you’re struggling to make repayments on your student loan, it’s important to first consider whether it’s worth taking drastic measures, or if making some changes to the way in which you spend money will work. For example, if you dine out regularly, pay a premium for cable TV, or have a brand new car with auto finance, scaling back on your spending will make it easier for you to repay your student loan. Switching to cheaper options or trading your car in for an older model will help you free up some extra income to put towards your student loan instead. Cutting back on extra expenditures as much as you can for a while will allow you to pay off as much of your loan as possible, potentially reducing your future repayments and improving your financial situation. Learn more about how student loans affect your finances at Apex Beats.
#2. Student Loan Consolidation:
If you’re finding it difficult to keep up with repayments or aren’t working at the moment, student loan consolidation is an option that you may wish to consider. This can help by reducing your repayments and locking in a lower interest rate. However, it’s important to carefully consider if this option is the right one for you, since it usually extends the period of your loan, therefore, increasing the total interest that you will pay over time. After consolidating your student debt, you may be able to pay it back at a faster rate once your financial situation has improved. If you wish to apply for income-based loan repayment options or student loan forgiveness in future, you may need to consolidate to a Federal Direct loan.
In certain situations, you may be able to defer your loan repayments for a specified amount of time to allow you to get back on your feet financially. For example, if you are currently unemployed, you are allowed to take up to three years unemployment deferment on your student loans. Since you can only claim up to three years, you’ll need to carefully consider your options and your plans for the future before applying. Those on a low income may also be able to apply for an economic hardship deferment. Your lender will let you know how much time you have once you apply, so use it wisely to improve your financial situation.
Did this information help you decide the best way forward for repaying your student loan? Let us know in the comments.