Student loans have helped millions of students pursue a college education. A lot of individuals cannot afford the rising cost of higher education, so they turn to student loans that can facilitate their education. Sadly, an increasing number of graduates are dealing with student loan debt. When students first take a look at loans, they often fail to see the impact that loans are going to have down the road.
For instance, if your debt is higher than your income, this is an immediate red flag for lenders. As a result, a large amount of student loan debt disqualifies you from applying for mortgages and other financial assistance from lenders. Thanks to the interest accrued over time, most student loan debts are quite a financial burden – but there is no reason you cannot crush your debt.
To get you started, here are some practical strategies that you can use to tackle student loan debt:
Understand What Your Loan Terms Are
Federal and private student loans typically offer students a grace period of six months before they can start making official payments. It is critical that you understand the terms of your loan so that you can assess your options for repayment. Although it can be disheartening, learning exactly how much you owe can reduce your stress levels because it creates an opportunity to prepare. Information about federal loans can be acquired from the U.S. Department of Education National Student Loan Data System, while private loan information can be accessed directly from your lender.
Explore Your Repayment Options
If you do not yet make enough money, you may qualify for an Income Based Repayment or IBR. Unfortunately, IBR is only applicable to you if you have a federal loan.
Start with the Highest Rate Loans
Private loans tend to have higher interest rates compared to federal ones. As such, it makes sense to start paying private loans first. Ensure that you are as consistent as you can be with the additional amounts that you pay to offset the debt.
Sort Out Any Defaulted Loans
You may not know it, but your defaulted loans can make it a lot harder to clear your debt. You can sort out any defaulted federal loans by enrolling the loans in the federal loan rehabilitation program. The rules for every defaulted loan vary, but you are generally required to make at least 9 payments within 10 months to get back in good graces. Once you complete the 9 payments, you can then focus on increasing your income so that you can pay your debts more regularly and consistently.