3 Helpful Tips to pay back your Student Loan Debt
We have seen student debt reaching an all time high in 2010, surpassing the credit card debt for the first time in the history of the U.S economy. Last year, the students completing their colleges left with an average of $24,000 in student loan debt and are still in search of a valid debt relief option. There is no doubt that the cost is higher in those private colleges where the annual tuition cost stands as $50,000 a year. We considered student loans as good debt as it’s likely to benefit the entire life of a student. But with unemployment rate rising- 8.7 percent in 2009, up from 5.8 percent in 2009, it’s now a debatable issue whether we can still count student debt as good debt.
Now a days college students are opting for default and debt management programs to get relief from these displeasing situations. This article discusses three essential tips to pay back your student loans.
- Once students were encouraged to defer their loan payments while they’re in school. But today, loan giants like Sallie Mae suggest that students shouldn’t wait to make payments. If you make regular payments while at school it helps you to graduate with less debt. Further, if you make payments at school (either interest-only or a simple $25 per month), it’ll save 30 to 50 percent in interest in the long run.
- If you have both student loan debt and credit card debt, start by paying off the smallest debt first. Once the smallest one is paid off, add the amount you’re paying onto the third smallest. By this way, you can get a psychological boost each time you pay off a debt. And this further encourages you to go after another debt.
- There are a few options available to repay student loan. These are loan consolidation, income based repayment program, forbearance and deferment. It has been noticed that those students who graduate from private colleges end up defaulting on their debts. In the long run it’s not a good option. When you default your total loan balance becomes due, you destroy your credit score and you total debt amount increases drastically. Further, if you default on a federal loan the government can seize your tax refunds and garnish your wages.
Finally, trying out these steps will surely make a big difference towards solving your student debt crisis.