Although paying off student loans can sometimes be a long and complicated process, it helps to have a plan in place to help you manage your debt. By using the following checklist, you can keep track of your loans, know your repayment schedule, and make sure you don’t put your credit at risk.
Know Your Type of Loans
Before you apply for any student loans, make sure you know the difference between federal and private loans. Federal loans come from the government and have a fixed interest rate. Private loans come from companies and businesses.
While they’re more easily available, they also have variable interest rates, which could make them more expensive. To borrow money for school, fill out the Free Application for Federal Student Aid (FAFSA®), which is necessary for anyone seeking help from the federal student aid program.
Figure Out Your Total Debt
Some students will end up graduating from college with many different loans, both federal and private. This is because they have to secure a different loan each year they’re in school. If this is your case, write down the lender, how much you owe, the different interest rates, and the repayment plans for each loan you have.
You also want to note what grace periods you have for each loan – this is how long you can wait after graduating college before you have to make your first payment.
Keep Your Information Updated
Lenders send plenty of important information to you about choosing a repayment plan and when to start making payments. If your lender doesn’t have your current email address, phone number, or mailing address, you might be missing these communications.
This could lead to missed payments, which equals penalties and other hassles that you don’t want. This is why it’s important to make sure you update your lenders when any of your important contact information changes.
Choose Your Repayment Option
Although everyone gets automatically enrolled in the standard repayment plan, keep in mind there are other options available that might work better for you. Standard repayment plans have equal monthly payments over a ten-year period. While the monthly payments might be high, this will help you pay less interest and pay your loan off faster.
However, if you’re struggling to make your payments, you can also look at one of the income-driven repayment plans. With these plans, your monthly payments are a percentage of your income. You’ll have to have an annual income verification every year, and it will take you longer to pay off your loan, but the smaller payments can make your loan more manageable.
Consider Loan Consolidation
When you consolidate loans, you combine multiple loans into a single one with an interest rate that’s based on the weighted average. While loan consolidation isn’t usually necessary for recent borrowers, it might be something that gives people with older federal loans a more beneficial repayment program.
From figuring out your total debt to picking the right repayment plan, with this helpful checklist, you can make sure you manage your loans properly.