Higher education is certainly a very expensive decision. If your financial background is remarkably weak, you may consider college as a distant dream or opt for student loans. This is when all complications and challenges begin. As you step out of college, the stress of repayment will definitely become much more evident. According to a recent survey, students must repay hefty loans while enduring in a competitive job market. There is no standard formula to eradicate student loans. However, those five simple tips, on ways to repay student loans, will make the process faster and help you tackle the situation wisely.
Redeemer #1 – Pay On Time
Smart students tend to treat educational loans like a chance, not a problem. It is a unique kind of debt designed to increase your chances of survival. If you have realized this truth, you will not daunt the presence of student loans. Meanwhile, remember that you cannot set yourself free from student loan by declaring bankruptcy. Private lenders and federal service providers have the right to sue you at any hour. They have the power to charge collection fee, attorney fee and court fees from borrowers who fail to repay loans. Also, lenders can take away a large part of your monthly salary if you have unpaid loans. With all that in mind, you must repay your loan on time. The mortgage must top your list of priorities.
Redeemer #2 – Apt Repayment Methods
Secondly, you should understand your loan completely and abide to strategies that will help you reimburse the loan as quickly as possible. Federal student loans are paired with many reimbursement plans. The standard repayment scheme will last for a decade. However, you can change the duration and monthly payments using the following schemes:
- Extension – This method will increase your loan duration to 25 years. You can start with low monthly payments and increase incrementally.
- Graduated – In this method, you can retain the loan’s actual duration but change its monthly payments every 2-years.
- Income – There are two different types of income based repayment methods, namely the income contingent plan and income-based reimbursement. The amount you pay every month will depend on the loan policy, family size, your income and financial background.
Redeemer #3 – Loan Forgiveness Schemes
Worthy students can opt for loan forgiveness schemes. Many federal student loan borrowers tend to cancel their loans completely. To be a part of these schemes, you must teach in public schools, do plenty of volunteering, engage in military services or take up medical courses. For instance, volunteers who work for the Peace Corps can reduce up to 70% from their student loan debt.
Redeemer #4 – Automated Repayment Plans
Meanwhile, sign up for automatic repayment plans. As suggested by its name, the reimbursement method lets the lender make monthly payments from the borrower’s bank account automatically. Automated payment schemes will reduce 0.25% from the loan’s actual rate of interest.
Redeemer #5 – A Second Job
Last but certainly not least, you should bag a second job. Additional sources of income will certainly boost your financial status and help you repay the loan quickly. This way, you can become loan free in no time!