student debt

Many of us weren’t fortunate to go to school for free. According to Student loan Hero, the average Class of 2016 graduate has $37,172 in student loan debt. As the years progress, the number continues to increase. Here are some smart moves for anyone with student debt.

Get Organized

After graduating, most student loans have a grace period of either six to nine months. It probably seems like you have time but it will go by fast. Getting ahead and having a plan puts you in the best position possible. The best starting point is The National Student Loan Data System. Through this website you can retrieve your federal loan information. Unfortunately, there isn’t a single database that stores all private loan information. However, retrieving your credit report and/or reviewing your monthly statements are also options to determine who your lenders are. Once you know that information, you cam move forward with these steps:

  1. Determine what type of loans you have (Federal or Private)
  2. Determine monthly payment amount for each loan
  3. Set a Payoff Deadline
  4. Create a payment plan
  5. Get on a budget

Know Your Options

Besides the student loan debt crisis, millennials are also suffering in the job market. This is not a reason to ignore your debt. Depending on your income, there are options to explore outside of your current repayment plan. On the contrary, if you can afford to accelerate your repayment, don’t settle for the option given to you. Review the payment plans available and choose the one you can afford. Some of the common repayment plans are:

  • Standard Repayment – Fixed payments for up to 10 years
  • Graduated Repayment – Start off with low payments which increase every two years
  • Income based Repayment – Monthly payment based off of your family size and income. Every year the plan is reassessed for any changes
  • Student Loan Consolidation – Combines your student loans into a bigger loan with a single payment
  • Student Loan Refinancing – Replace your existing student loans with a new loan at a lower interest rate and in some cases a lower monthly payment

Beware of Loan Forgiveness Scams

I can’t tell you the amount of times I’ve logged into Facebook or received emails about having my loans forgiven. It sounds good, but in a lot of cases these programs are scams. Don’t get me wrong; loan forgiveness programs do exist but only under specific situations. A few examples of loan forgiveness programs are:

  • Public Service Loan Forgiveness: If you work in public service and have made 120 consecutive payments on your direct loans, the remaining balance may be forgiven.
  • Teacher Loan Forgiveness: If you teach full-time for five years or more among other qualifications you may be eligible for forgiveness of up to $17,500 on your direct and federal Stafford loans.
  • Perkins Loan Cancellation and Discharge: If you’re employed in certain occupations, you qualify to have a percentage of your loan canceled for every year of service. Examples include: Member of the U.S. armed forces, child or family services worker, nurse, etc.

Be sure to research your options and contact your student loan servicer to find out if you qualify to have any of your loans forgiven, discharged, or canceled. Also be sure to refer to The Federal Student Aid website.

Don’t Jump at The Lowest Payment

There’s a certain excitement that some people get when they feel like they’ve beat the system. Whether that’s putting your loans in deferment or forbearance because you don’t want to pay or gunning for the lowest payment. If you want to stay in debt, that’s the best way to go about it (insert sarcasm).  However, that is not the road to take when pursuing financial freedom. You should want to free up your money not tie it down longer.

Don't jump at the lowest payment and hang on to debt. Pay more now to FREE up your money so you can enjoy it. Click To Tweet

Your main goal should be to accelerate your repayment as much as possible. The lower your payment the longer it will take to pay off. If you can afford the shortest-term option, go for it. If not, choose the next best option and revisit as your financial situation changes. Making lower payments over the course of 20 years will cost you way more than stretching those payments over 10 years. Don’t just think for the moment. Sacrifice as much as you can now, to live better later. I talk more about why you should give a damn and more in Student Loans: Do We Give a Damn or Nah?

Don’t just think for the moment. Sacrifice as much as you can now, to live better later. Click To Tweet

Talk to Your Lenders

You may be in a tough spot and paying your student debt may not be top priority. While this is common among a lot of millennials, you shouldn’t stuff your student loan bills in the kitchen drawer and forget about them. You would be surprised to know how many lenders are willing to work with you if they were aware of your situation. This is why it’s important to know your options. The current payment plan may not be working for you, but there are options to consider that will best suit your financial situation. If you don’t want to do the research yourself. Pick up the phone, call your lender, and have them walk you through the details.


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