The whole process of studying may be a bit overwhelming. Students have to go through all kinds of difficult tasks, exams which bring along a lot of stress and anxiety. And as if it’s not hard enough, this all is even more aggravated by the burden of student loans which can continue overwhelming the students even after they graduate.
The general picture of the number of student loans is horrifying: total student loan debt in the U.S. is $1.48 trillion according to the reports of 2018. The majority of loaners struggle to pay off the debts, which can stick with them throughout their lifetime.
For many people getting a student loan is the only option to get a higher education. But all these complicated financial schemes are a burden for teenage minds, as they’ve just graduated from high schools and haven’t even got a chance to say “goodbye” to their childhood.
So how can students cope with this burden? Here are top 5 tips for avoiding the student loan repayment traps.
- Make Sure You Know Payment Conditions
The information about where the money for your loan came from, how much you need to pay and who is the receiver of your repayment is very important. Although there are two main types of loans, federal student loans and private loans, these options can be modified. You can get a federal loan which is sponsored by a particular organization, and it is very important for you to know this information.
If you’re not sure about the conditions of your student loan, you can start by visiting a website of Federal Student Aid where you can find the information on all federal student loans provided by the U.S. Department of Education. You can also ask questions if you’re interested in particular issues.
- Consider Income Driven Repayment Plan an Option
Ask your student loan servicer whether you can apply for an income driven repayment plan. If you don’t want to get into a trap of rising percentage that comes with the years of not paying your student loans, you may need to start searching for an option that will help you make this process less financially stressful.
U.S. Department of Education offers a repayment estimator to help you figure out the plan of paying off your student loan. You should also send a request for a written explanation of how repayment plan will work particularly for you and whether you’re eligible for income driven repayment plans.
- Be Enrolled
The biggest mistake you can make is to not keep being enrolled. For example, if you’re eligible for an income driven repayment plan, normally it could be necessary to re-apply for it every single year. Otherwise, you might lose this option. “When I was a student, my loan servicer warned me that I might lose this option if I don’t take care of re-applying each year”, says Annie Wagner, a developer at write-my-essay-for-me.com. “I took good care of it but a lot of students lost this option and never had a chance to get it again.”
Always make sure that you know the conditions of your income driven repayment plan. Otherwise, you might lose this option at all and pay even more.
- Consider Forbearance
Under particular circumstances, the U.S. Department of Education offers a deferment and forbearance program, which is basically a halt on your payment, issued only for a limited period. Forbearance can be general or mandatory, and is granted under the following circumstances:
- financial difficulties
- change in employment
- medical expenses
- other reasons considered by a loan servicer as a financial burden
If you deal with relatable situations, you can ask whether you’re eligible for the forbearance. You should be aware of this option because it is a chance for you to take some time and put financial affairs in order. Otherwise, you risk getting in a dead end financially.
However, it’s desirable to avoid forbearance, if possible, as you might be eligible for more beneficial repayment plans.
- Keep Track of All Your Payments
This might sound like an obvious one, and yet many loaners don’t pay full attention to tracking their money. If you have a student loan, consider it your job to make sure that the addressee has received all your payments. Get a separate notepad where you will write down the date, time and amount of money you’ve transferred.
It is also very necessary to save all the receipts and make the copies of them, store the scans of them on your computer, as the paint on the receipts may fade with time. And even after you’ve repaid everything, don’t rush and throw into trash all these receipts. Who knows, what you may need them for later?
While getting a student loan may be a chance to get a higher education you want, it also has a lot of downsides. Make sure that you know every detail about your student loan repayment plan and also know your options. Knowledge is power, so use it and treat your money wisely.