By Ryan Laspina
Senior Specialist, Red Flags and External Reviews
If you have student loans that need repayment, you may wonder how to go about creating a repayment plan. If you are no longer attending school at least half-time and your grace period is about to expire, repayment is right around the corner. While this feeling of imminent bills may cause some stress, there are several actions you can take.
Maintain Contact with Your Loan Servicer
Your loan servicer is the best source of information about your loan. They will be familiar with the terms and conditions of your loan, your current balance, and available repayment options.
In addition to asking your loan servicer any questions you have, always keep them updated with your current information. For example, if any of your personal information – your name, address or employment situation – changes, tell your loan servicer as soon as possible.
Create a Budget That Includes All of Your Income and Expenses
Your budget should be manageable and accurate. A carefully prepared budget lets you know exactly where your money is going and how much you can spend on loan repayments each month.
Pick a Loan Repayment Plan that Best Suits Your Financial Situation
There are a multitude of repayment options available. For instance, you can choose an income-based plan that allows you to pay what you can afford.
Other options include a graduated payment plan that lets you pay more than the monthly minimum due (the advantage of this plan is that you pay less interest over the life of the loan) or a forbearance (you do not have to start payments for a certain period of time).
Your loan payments will be due each month. If you opt for a repayment plan with longer terms, you could pay more in interest in the long run. Contact your loan servicer to have him or her help you with a repayment plan that works best for you.
Control Your Spending as You Make Loan Repayments
The quicker your loan is paid off, the better you will feel. But you might have to make some sacrifices while you make loan payments.
You can still buy Christmas gifts and go on vacation, but be careful about any excessive spending. Building and adhering to a budget helps you to avoid overspending and getting into financial difficulties.
Reach Out for Help If Necessary
Tackling student loan repayments can be a daunting proposition. You might feel overwhelmed by the amount you owe or by the repayment process in general. However, each timely payment brings your balance down and builds up your credit.
Remember, stay in regular contact with your loan servicer so that both of you are on the same page and ask Financial Aid if you need further advice. After that, the key is to make smart financial decisions and regular monthly payments.
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