Student loans can be a serious burden on recent graduates. Trying to find a job can be difficult enough, but adding the stress of a major loan payment can make it that much more difficult. However, before you make any decisions about your loan, you must take into consideration how those decisions will affect you down the road. Here are some tips for paying off federal student loans, such as Perkins and Stafford loans.
Prioritize Paying Your Loan
When you first get out of school, you are given a 6-month grace period where you don’t have to pay your loan if you choose. However, during this time, interest is still accruing. So, if you have the means, start paying it right away. By starting the process of paying your loan, you will save yourself a lot of money in interest down the road.
Don’t Be Late
Falling behind on your student loan payments can cost you. There are very expensive fees and penalties that you will be charged if you are late. Because of this, be sure you know exactly what date they need to receive a payment by and make sure to make a payment at least a week before then to ensure they receive and process it in time.
Extensions
If you truly are unable to make loan payments after six months, you can request a deferment or forbearance. Both of these options will give you more time to start your loan payments, but you have to apply for it. If you simply do nothing and do not start making loan payments after 6 months, you will be charged late fees and penalties.
How Many Years?
There are many options for the length of your loan repayment ranging from 10 to 25 years. We suggest choosing the 10-year option. Not only will you be able to pay it off sooner in your life, but you will also save a lot of money on interest. The larger payment might seem like a lot now, but if you can make it work, you will be glad you did once it is paid off.
Bankruptcy
It’s important to note that even if you end up having to file for bankruptcy, student loans are often not forgiven. While credit card and mortgage debt is forgiven in most cases, student loans will still be required to be repaid, even after you have gone through the bankruptcy process.
If you are interested in understanding how a student loan payment fits into your overall budget and financial picture, we encourage you to talk to one of our member advisors. Simply stop by a branch, or give us a call at 800-835-3400.
Additionally, if you are interested in getting a loan for your education, visit the Student Loan page on our website.