A student loan is something that every graduate would like to settle as quickly as possible. Since it is mandatory to repay your loan, it is equally important to make a great plan and utilize this list of helpful online resources to avoid making costly mistakes. If you understand how you can repay your loan safely, it can be manageable. Having a positive attitude is a good place to start – knowing how to repay it is a great step to start with. Here are some tips to use when repaying your student loan:
1. Track Down All Your Student Loans
It is important to have a clear understanding of your college loan debt to make a repayment plan. Unlike an auto or mortgage loan, a college/university graduate can have several student loans since college students usually borrow for each academic year. This means that most borrowers do not know what they have and whether they have federal or private student loans. It will be a good idea access the websites of your loan servicers to find the interest rates and total principal amounts you required to pay. Then make a great plan to repay it as quickly as possible.
2. Repay Your Student Loan Automatically
While it is very common, missing to pay it off can easily get you into huge financial trouble. According to research, about 25% to 33% of students who borrow for college education are delinquent or late with their first loan payments. Automatically setting up payments through your bank accounts will significantly reduce the chances of missing or late checks. Also, signing up for automatic loan repayments can also contribute to reducing interest rates. For instance, some student loan servicers reduce interest rate when you repay your loan automatically.
3. Refinance
These days, some private lenders offer student loan refinancing. Refinancing rates often start as low as 2%, but vary from one lender to another. By refinancing your student loan at a relatively lower interest rate, you can extremely reduce the total loan debt. Another reason why you should consider refinancing it is that you can choose a new repayment period (term lengths). Typically, term lengths range from 5 – 20 years, but vary from one lender to another. Selecting a shorter repayment period will, therefore, reduce your total cost of your loan debt even more. Most banks do not charge any origination, application or pre-payment fees.
Additionally, pay it off strategically and if possible, repay it with the highest interest rate first. You would not be penalized for repaying a student loan early.