Student Debt: Top Tips for Keeping Your Loans On Track

This article is brought to you by GradGuard. We protect college students and their families from the financial risks of college life, like providing a refund for tuition or replacing a stolen backpack when your school may not. When the unexpected happens, GradGuard’s tuition insurance and renters insurance can help you get back on track.

Student loan debt continues to soar higher and higher in the U.S. as the cost of a college education just keeps on rising. If you’re in college, chances are you’ve had to take out at least a few loans to pay your way through it, which is no surprise! More than 40 million people in the U.S. have had to borrow money to pay for college, so it’s no surprise you’re probably in the same boat. As the years pass by though, the looming specter of student debt gets closer and closer, and pretty soon you’re gonna have to start paying back those loans or risk ruining your credit score and causing yourself a lot of financial problems in your future. To help you keep your student loans on course properly, here are our top seven tips for organizing and tackling your student debt.

Photo Via: Pixabay.com

1. Figure Out How Much You Owe

Ok, we know it’s an obvious place to start, but really there’s no other first step to take! Most people end up taking out a plethora of different loans, all of them for different amounts, which can make it hard to know where to start when it comes to paying them off. Your first step, therefore, should be to get all the hard data and find out how much money you owe in total. Find all your different loans and calculate how much debt you owe for each both separately and in totality. Once you have that information, you can begin formulating a plan to more easily manage them.

2. Know the Terms

Just like every loan you took out was for a different amount, each of those loans is going to have different terms for things like interest, principle, and repayment rules. This all matters a huge amount, as depending on the terms some of your loans are much more important to pay back quickly. Additionally, there might be extra fees involved with some of your loans if you take the wrong steps, so it’s crucial you have all the info. Make a spreadsheet or a document, or simply write down all the terms of each of your loans so you can more accurately plan how to repay them.

3. Use the Grace Period

The grace period for your student loans is incredibly important, and it’s also the reason why they’re not as big an issue until you start nearing graduation. The grace period is the amount of time you have before you need to start paying back the money you’ve borrowed. For the vast majority of loans, this period is six months after either graduation, stopping your studies, or dropping below half-time enrollment. This period is there to allow you to set yourself up a little financially so you can actually begin making a dent in all those loans, so put it to good use!

4. Budget, Budget, Budget

Once you leave college (and maybe even while you’re there) you’ll learn the importance of budgeting. Budgeting your funds is incredibly important once you enter the wider world, as there’s a lot that’s going to be demanded from your funds. Between rent, utilities, food, and any additional expenses like pets or gas, there’s a lot of money you need to spend. For anyone reading this article, of course, there’s another expense tacked on to the prior list: student loans. All your loans will require a minimum payment each month, which means they’re something extra to budget for. If you have extra money when budgeting paying more than the minimum can be a great way to speed up clearing your debt, but as long as you’re careful with your planning you’ll be fine either way,

5. Pay the Highest Interest Loans First

If you know what interest is you know exactly why we’re saying this. When taking out a loan a bank will charge you interest, which is basically additional money you have to pay back based on the size of the loan and how long it takes for you to repay it. This usually is formatted as a percentage: i.e., one of your loans might have a 5% interest rate, which means you’ll be paying an extra 5% of the total loan amount if you let too much time pass. Part of the reason you collected all that info in step two was so you could find out what your highest priority loans are and can get rid of them quickly and easily.

6. Consider Consolidating

Loan consolidation can be a really useful practice to help you manage your student loans. You know how all your various loans are owed to different groups and have different rules? Well, you can change that! Consolidating your loans can lower your monthly payment and make it easier to manage your student debt. On the other hand, it can also extend the amount of time needed to repay your loans, making them cost more due to the increased interest period. It’s a double-edged sword, but it’s definitely an idea worth considering to help you better manage your student debt.

7. Sign Up for Auto-Debit

Auto-debit is a very useful tool for helping you manage your student debt. Essentially, enrolling in an auto-debit program automates the payment of your student loans each month, so you don’t have to worry about remembering to submit your payment. Additionally, some lenders may lower your interest rate if you sign up for auto-debit, which is a great perk and makes it well worth considering.

Student loans are expensive to have and time-consuming to get rid of, never mind how complicated they can be to understand and manage. With these tips, you should have a better idea of some easy steps you can take to better manage your debt and keep your loans on course as you make your way into the wider world.

It’s no secret that college costs a lot of money. Make sure your investment in higher education is protected with GradGuard. Our affordable tuition insurance and renters insurance plans are specifically designed for college students. Customizable plans make it easy to protect your tuition, room and board, laptop, bike, and so much more.