If you’re planning on going to college soon, then you may have been focused on your college application essay.
But it’s never too soon to think even further into the future. For instance, the average student loan debt is over $32,700. Paying back this amount is not going to be easy, so it’s best to have a solid idea on repayment so you don’t end up out of your depth. Moreover, a student loan can impact your credit score in much the same way as other loans do. This means you should always try to pay the debt as agreed to keep your credit healthy.
Are you now wondering about the best way to repay student loans? Then read on. Here are 7 financial aid pay back methods.
1. Start During the Grace Period If Possible
Many student loans give you a grace period after you’ve graduated.
What is a grace period for student loans? This means you have a certain period where you don’t have to repay the student loans just yet. This is usually 6 months so you have time to find a job after graduation.
If you can start repaying your student loans during the grace period (such as from savings earned while working in college), do it. Since you’re paying off your capitalized interest, the more you can pay off, the better.
2. Refinance If Possible
Refinancing is essentially where you trade in your student loans for a new one. Why would you do this? To get a lower interest rate.
However, to do this, you’ll have to have a well-established job where you’re getting a steady income. In addition, you need to have a good credit score, meaning the high 600s. Otherwise, you’ll need a cosigner.
3. Take Advantage of Autopay Features
Lenders want to get their money on time, so what better way to get it by getting people to sign up for autopay? To entice customers to opt in for this, the majority of lenders offer the incentive of a slightly lower interest rate. This is usually around 0.25%.
While this amount isn’t very much, it’s better than nothing. Plus, autopay ensures you always make payments on time, which can be very helpful if you’re usually forgetful. When you don’t hit your student loan due dates, not only can it hurt your credit score, but also incur penalties.
4. Check If Your Employer Has a Loan Repayment Incentive
Depending on the field you’re in, it may be highly competitive. Employers will want to attract the best talent around, so what many do is offer an additional employee benefit of assistance with student loan repayments.
When you sign on with a company, check to see if they have this benefit. If so, then make sure you enroll in the program as soon as you start work to take full advantage of it.
Choose the Best Way to Repay Student Loans for You
The best way to repay student loans won’t be the same for everyone. But now that you’re more educated on ways to get rid of your debt quicker, you can pick the ways that work best for your personal situation. By using a good combination of methods, you’ll make sure you get rid of debt in the fastest way possible.
Are you planning on going to business school? Then take a look at this article about studying for the GMAT.
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