If you are a college student or recent graduate who is either drowning in loan debt now or will be in the near future, you are far from alone. In the United States, more than 9 million borrowers had $20,000-$40,000 of student loan debt in 2022. With these numbers in mind, it is understandable why the thought of student loans might cause anxiety. However, there are ways to overcome financial stress. For example, consider these tips.
1. Borrow Only What You Need
When it comes to taking out student loans, one of the smartest things you can do is to only borrow what you need. With interest rates that start adding up the moment you accept the money, student loan amounts can quickly balloon into astronomical numbers. Unless you really need the money, try to refrain from maximizing your semester refund. Keep track of how much you borrow, and always find a worthy purpose for whenever you spend it.
2. Have a Plan
What are your plans for your education as well as student loan repayment? If you do not have an answer to this question, now is a good time to reflect. Before borrowing money to pay for school, ask yourself why you are attending and what you intend to do with your education. Additionally, think about ways that you can repay your loans. Then, write down what you intend to do as well as the steps it will take to do it.
3. Create and Follow a Monthly Budget
How do you pay for everything each month? Do you follow a budget, or do you just wing it? If you learn how to create and follow a monthly budget long before graduating college, then you will be well on your way to successful repayment when the time comes. By creating and following a monthly budget on a consistent basis, you can significantly reduce money worries while also saving some cash for emergencies.
4. Understand Your Loans
With student loans, there are several different types, including both public and private options. Then, within each of those categories, there are even more choices. For example, there are subsidized and unsubsidized loans through the government and the details of each impact how repayment works. In addition, terms between public and private lenders can greatly vary. It may be tempting to ignore student loan notices and avoid reading emails, but the more you know about your loans, the better. Typically, more understanding leads to more options.
5. Know Your Servicers
If you have public loans through the government, federal student loan servicers will be the organizations that process your education money. As such, you should figure out who your servicer is as soon as you receive your first student loan. In general, this is the place you will contact with any questions or concerns regarding your public student loans for as long as you have them.
6. Create an Online Account
You have the option of mailing paper checks and money orders, but why waste the time, money and paper? To keep track of your student loans in the most efficient way possible, start by creating an online account with any public or private loan lender. Then, regularly sign in to note your debt balances and establish automatic payments.
7. Keep In Touch
Finally, you should always make an effort to stay in touch with your student loan lenders. This is especially true if you encounter or predict any financial difficulties. Sometimes, lenders can offer ways to help borrowers repay their balances, but without speaking up and staying in contact, it can be very challenging for lenders to even know how borrowers are doing.
Student loans offer millions of individuals access to educational opportunities that they otherwise could not afford, however, these programs do not come without a price. Learning as much as you can about student loan policies and the best ways to respond to changes can lead you down a path of success. Keep these tips in mind as you plan your future.