Student loan management must be managed alongside your other financial priorities, and budgeting tools and apps can provide invaluable assistance in understanding income, expenses, and loan payments.
Emergency savings accounts are also crucial, to address unexpected expenses or unexpected financial setbacks, while deferment, forbearance and loan forgiveness should be explored as possible solutions.
Paying Off Your Student Loans
Staying ahead on student loan repayment can help you meet other financial goals, like saving for a house or car down payment. One effective strategy to speed up payoff is making more than the minimum monthly payments; use an online payoff calculator to estimate what savings could result.
If you have federal student loans, your loan servicer is your go-to person when it comes to repayment plans that work best for you. Auto pay allows you to ensure payments don’t slip by the wayside!
Consolidate your student loans or select an income-driven repayment plan to reduce interest costs and cap payments based on your income and family size, or work in certain fields such as teaching or public service; loan forgiveness could even be available – for more information about these opportunities check out our Guide to Student Loan Forgiveness and Relief Programs.
Living Within Your Means
Living within your means, or keeping spending below or even equal to income, is an elusive goal that may prove more difficult than anticipated due to credit cards and loans, yet reckless spending will catch up with us eventually.
Setting a budget can help you live within your means by outlining a plan to pay back debt without overspending on essential items like food, housing and transportation.
Understanding your loan balances, interest rates and repayment terms is also helpful in staying on top of any potential issues that might arise. If the current payment schedule doesn’t suit you well, contact your lender about changing it, or work with a debt settlement company to reduce what you owe. Addressing issues early can save you hassle in the future.
Loan Forgiveness and Relief Programs
If you’re struggling with student debt, loan forgiveness and cancellation could provide relief. These procedures allow for partial or total forgiveness; however, meeting certain standards usually is required – for instance the Public Service Loan Forgiveness (PSLF) program offers debt relief to people working full time for a government agency or certain non-profit organizations and making 120 on-time payments through an approved repayment plan.
Federal income-driven repayment plans provide lower monthly payments to borrowers with low to moderate incomes, as well as offering the possibility of loan forgiveness after 20-25 years of on-time payments. But PSLF only applies to loans issued by the federal government; any private or other types of federal loans do not qualify.
Credit cards can be an effective tool for repaying student loans, but beware. Credit card rewards are determined by how you spend, so use it responsibly by only making purchases that fit within your budget and paying off the balance each month in order to avoid interest charges.
If you have an outstanding balance on multiple credit cards, transferring it to one with an introductory zero percent APR could make financial sense. Just be mindful that these cards tend to come with minimum transfer amounts as well as transaction fees and higher interest rates after the introductory window ends.
An alternative option for paying student loans with credit cards would be using a third-party service like Plastiq; however, these providers usually charge a fee with each payment transaction.