A lot of students struggle with repaying the student loans. This is because of the low levels of unemployment and the few that are employed are not paid enough money to help finance their loans. This, therefore, means that the loans continue to pile up and it gets even worse with the high-interest rates that accrue on the loans.
There are, however, a number of success stories of students who have repaid all their loans and are on the right track to financial freedom at a young age. One of these individuals is Michelle Shroeder-Gardner, a financial blogger running the blog: Making Sense of Cents.
The first thing you see when you visit her blog is a link to the blog post on how she was able to repay close to $40,000 student debt in less than seven months. She stresses on being able to save as much as possible and ultimately get rid of the student loans.
It is important to learn how to pay off student loans as this leads to a number of positive outcomes. First, so much financial stress will be alleviated. When you feel less financially stressed, you are able to channel money into something as important as saving for retirement. Getting rid of student loans early also gives one the freedom to live life in a less conventional way. You may decide to travel or quit and look for a better job because you are not tied down to a low-paying job because of the “security” it presents.
In as much as student loan repayment brings forth these positive perks, it is quite hard to clear off the loan in a short amount of time. The good thing is that the struggle lasts for a while but the joys afterward are insurmountable. Knowing that you do not owe the government any money in terms of student loans relieves an individual and they are able to make better financial choices.
Creating a practical student loan repayment plan
- Be sure of the total student loan you have
Determining the amount of student loan consolidation to be repaid is the first step. This amount is not just an estimate but a precise figure. Pulling up the records and totaling all the loans down to the penny will give you a clear picture of the exact amount that you need to pay. This also puts things in the clear in that many people do not always have an idea of how much they owe in totality. Their estimates are always low and they get shocked when presented with the actual numbers.
- Do your best to understand the student loans
After applying and getting the loan, that is where most people stop. No one really cares to know the details of the loans. To create the best student loan repayment plan, therefore, here are a number of things one ought to be familiar with:
- Interest rates – there are loans with fixed rates while others vary. Figuring out these interest rates will be essential in making such decisions as deciding to pay the loans with high interest-rates first then followed by those with low rates.
- The meaning of monthly payments – many people are not well informed on the monthly payments to be made. Some think that there is a fixed amount, others think that there is a minimum to be paid and if they do so then no interest will accrue. All these are incorrect and thus being aware of the monthly payments will be paramount in long-term student loan repayment.
- Student loans reimbursements – there are employers that will give students with loans some money to put towards the repayment of the loans. There are however some stipulations that have to be met in order to receive this amount. Looking into this option is a great way to help in the creation of a loan repayment plan.
- Auto-payment plans – most student loans have an auto-payment plan where a student pays the total amount owed one off and receive a discount. Some will have the interest rate lowered and this would be great in avoiding the high-interest rates.
Student Loan Refinancing
This is yet another option when looking to pay back your student loan. This is whereby you take out a loan to pay off your other student loans. It is a good option especially when your current credit score is better than when you took out the student loans. Student loan refinancing may also qualify one for better repayment terms such as lower monthly payments and/or a lower interest rate.
Student loans are great because they help individuals go to school without a hitch but repaying them is even better because it gives one a sense of accomplishment and a step closer to financial freedom.