Follow These 5 Tips If You Are Overwhelmed By Student Loan Debt
It is understandable to feel overwhelmed by student debt – you certainly aren’t the only person. Total student debt in the United States is upwards of $1 trillion, only second behind mortgage debt, so it’s easy to see why so many people feel overwhelmed when dealing with their student debt.
Dealing with student debt makes other things in life that much tougher, especially getting financing for other purchases such as a mortgage. Feeling like there is no end to your student debt and have no idea what to do? Then follow these 5 tips:
1. Work Out Total Debt
Like with any type of debt, it’s important to take stock of how much you owe. Most students have debt from various sources accumulated after each year of college, so it’s easy to get lost in all the numbers.
It may feel daunting but sit down and work out how much your debt totals, after which you can begin to formalize a strategy for paying it back. This process is difficult as it can feel stressful to see how much you owe, but it really does help in the long run.
2. Determine Loan Terms
As most students have several loans after college, there is going to be variances in the terms of each long. So, start to categorize all the different terms of loans, including the different repayment amounts and interest rates.
Along with working out your total debt, this step allows you to determine the exact terms of each loan and how to avoid unnecessary interest fees and possible penalties. Be sure to read the fine print of every loan so there are no unexpected fees you’ve missed.
3. Make the Most of Grace Periods
The grace period of a student loan refers to the period of time after graduation where you need to start paying the loan back. It varies from each school, so be sure to understand how much time you have before you need to start paying back – this is the perfect time to start saving to avoid feeling overwhelmed.
4. Pay the Highest Loans First
As student loans have various sources, the interest fees are likely to differ too. One of the more effective ways of dealing with the stresses of student loan debt is to target loans with the highest interest first.
A good method for doing this is to budget above repayment fees each month whenever possible, then applying the additional fees to the loan with the highest interest rates. Once this is paid off repeat the process for the next highest loan, continuing to do so to help reduce the largest debt fees first.
5. Think About a Consolidation Loan
Consolidating a student loan is a very worthwhile endeavor, especially for those with debt from various sources. In doing so, you may end up with lower monthly rates going towards a single loan, and in many instances an extended deadline to pay it back
However, this type of loan is usually best saved for people that feel completely overwhelmed by student loan debt, as the major setback of a consolidation loan is higher interest rates and possibly a longer repayment period.
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