The first step to taking control of your student loan debt is acknowledging that it exists. If you’re allowing your student loan bills to pile up and collect dust, thinking they will eventually go away, you will never gain control over your finances.
Fortunately, there are plenty of valuable resources available that can help you manage your debt and figure out ways to reduce your monthly payments, get out of default, and potentially receive forgiveness on your loans.
1) You can’t bury your head in the sand. The most common mistake that borrowers make is thinking that their loans will disappear. The best way to deal with this is by creating an actionable plan. You first have to determine what you’re going to do in regards to paying back your student loans. You can’t keep your head buried too long or your debt will become cumbersome to pay off. It’s important to keep in mind that although you can discharge your student loans in bankruptcy, it’s the least attainable next to filing bankruptcy on mortgage and auto loans. When filing, you would have to endure a separate process of proving “undue hardship,” as determined by the courts.
2) Make sure you know where you loans are. After graduating, many students move without notifying their servicer of their new address, and, therefore, never receive their bills. It’s important to keep track of your loans so that you don’t become delinquent unnecessarily. You need to know who is in charge of servicing your debt. You can access this information through the National Student Loan Data System, where your servicer information, balances, and interest rates will be provided.
3) Consolidation is not the answer. A lot of borrowers automatically assume that consolidating their loans will save the day by potentially providing the lowest interest rate. About a decade ago, this was a no-brainer. However, times have changed and it may no longer be the most financially advantageous. Now, about 6.8% of student loans are already set at a fixed interest rate. It’s crucial to consider other options so that you make the best decisions about handling your debt.
4) You can’t avoid budgeting your student loans. Proper budgeting starts by figuring out how much money you have to pay on a monthly basis and how much money you have available to pay back the debt. Luckily, we can create a plan for you!
5) You must think outside the box. There are a variety of payment options available to help you best manage your student loan debt. Student loans have rules and regulations and several repayment plans that you can use to your advantage, especially with federal student loans. There are different ways to put off making payments and even reduce your monthly payment amount.
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