Student loan debt is an issue and many analysts say the nation’s record-high $1.56 trillion in student loan debt is also casting a nasty shadow over the economy, delaying first time home purchases, slowing down consumer spending and inhibiting business formation.
This can only mean that Americans are having more of a difficult time dealing with their student loans than anything else.
If you thought that the stressful college period was over, know that you may not be out of the woods yet.
Student loans can make your financial status a nightmare especially if you do not have a financial plan set for after you graduate.
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It is crucial that you develop a financial plan for your student loans.
6 Smart Tips to Use After Graduation When Handling Your Student Loans
This helpful student loan advice will help you take control of your financial life. Explore these six smart tricks to help you get in control and stay ahead of your student loans after graduation.
1. Pay off the high-interest loans first
You may have taken a lot of different loans during your college period. And now that you are done with school, it is finally time you start paying them back.
It is important to note that different types of loans accrue different interests. Some have higher interests than others. And it is these loans that are more expensive and difficult to deal with as they take more out of your pocket the more you keep them around.
This is the reason why it is wise to pay them off first and ease the burden. You can then pay off the lower-interest loans without much problem.
2. Make extra payments
Student loans can go up to, and well over $35,000 for 4-year college tuition.
They can also have interest rates that go up to and above 5.7% which can end up increasing your overall debt. And that fact alone should be motivation enough to make you want to pay them off as fast as possible.
One of the best ways to do this is by making extra payments while in college.
So, if you were making $400 each month before, you can add an additional amount to that, say $150 to make it $550. This will also reduce your loan period significantly as well as save you a lot of cash on interest.
If you cannot afford the $150, then why not add $90 or $80?
You will still see the difference.
3. Calculate your overall debt
The first thing you need to do after graduation is to know exactly how much you owe. This is especially important if you took numerous loans while in college.
Sit back, and do the math so that you know exactly how much you should pay.
This is the first step towards paying off your loan.
It will help you plan how you will start paying off your quick loans online. It also gives you the opportunity to consolidate all of the loans or even explore forgiveness where applicable.
4. Consolidate your loans
Loan consolidation helps to lower the total weight of your monthly payments. It will increase the length of your loan period which allows you more time to pay off the debt.
This, however, means that there will be more interest payments on the consolidated loan too. But at the end of the day, it will have taken a lot of the monthly repayment stress of your back.
5. Defer payments
You can also choose to request your student loan lender to defer the payments. This is usually the best option especially if you are not yet employed.
You can also request for a forbearance of the loan. This allows you to stop paying the loan temporarily. Any interests accrued during the time will, however, be added to the principal loan amount.
6. Know the grace period of your loans
Different loans have different grace periods. This is the length of the time that the lenders allocate you before you need to start making your payments.
- Federal Perkins loans have a six-month grace period.
- The Federal Perkins loans have nine months as their grace period.
Overall, you need to know the grace periods of all of your loans.
Are Student Loans an Issue?
According to Federal Reserve Economic Data (FRED), American families are carrying 1.6 trillion dollars of student debts, which is about the amount of 8 percent of the national revenue of the United States. Student loan has always been a problem since the 1980s, and the problem has only gotten worse.
The average tuition of college in the states for an undergraduate student is $89,420. The better school you get in, the higher the tuition can be. The highest could be about $140,000. Looking at this cost alone can stop many people from seeking higher education.
And if you are brave enough to start this challenge, you are stepping into the endless cycle of student loans. Even if the interest of student loans is relatively low, it’s hard for people to maintain their most basic needs as they spare everything to pay off the debt, not to mention satisfy the need for self-actualization, which is many students’ reason to go to university.
And when they start their family in a few years after their graduation, the burden would be even heavier. Once their children hit the university age, the kids will face the dilemma between risking a better future or endless debt by going to university and living a mundane life without fulfilling their dreams. The intimidating fact can decrease the number of people receiving a high-quality education university provides, which slow down the economic growth of the country.
Student loan effects on the economy
The growth of the economy is mostly built on intellectual people who are pursuing their visions. However, student loans can stop those people from a promising future and making contributions to the economy even if they graduate from university.
After their graduation, they will be facing enormous student loans, and paying off debt becomes their top priority. Instead of sharpening their skills by going to graduate school or finding a job that is the extension of their learnings. They tend to accept part-time jobs or jobs that aren’t related to their study so that they can be freed from debt as soon as possible.
For example, many students rather work in company A which pays $200 more per month than business B which can provide better training and growth opportunities. A student loan can narrow students’ horizons and ambition to aim high, which is a big hinder to the economy.
Also, people in debt are less likely to buy houses and cars and get married, which hinder the housing and automobile markets and the national average income. One of the reasons why marriage ages have risen is because people are afraid of the responsibilities of raising a family when they aren’t even able to pay off their student loans. A person tends to perform better in all aspects, including financially, when they have responsibilities. However, the student loan problem has scared away many people from this stage and lesson of life.
Paying off Your Student Loans
There you have it. That’s some of the best student loan advice you can hear. Navigating through the student loan pay-off process can be intimidating but if you take some time to prepare yourself you should be fine.
Good luck paying off your student loans in record time!