Paying off college loans can seem like a next to impossible task. Each year, more people graduate with increasing levels of debt. This is largely due to the fact that college is expensive. It doesn't matter if you've graduated from a state school, private college, or community college. Most people have some level of debt associated with getting a degree. Now the trick is how you're going to pay for it.
There are a number of pays to pay off your college debt. Fortunately for those who have taken Federal loans, grace periods and deferments can help you until you find a full time job that allows you to begin making payments against your loan. Regardless of your employment situation, the responsibility of loan repayment is yours and yours alone.
Depending on how recently you graduated and type of loans you've taken out to pay for college, you may qualify for different loan repayment options. One of my personal favorites is student loan consolidation. The benefit here is that you aggregate all of your outstanding loans into a single loan with different payment terms. This may result in a lower interest rate and smaller monthly payment.
Some individuals who consolidate see longer repayment periods. However, a little known method of reducing your payment period is by making one extra payment towards the principle of the loan each and every year. For longer repayment periods, this reduces the amount owed and the life of the loan significantly.
You should start by speaking with your lender. Do they penalize you for early repayment? If so, what are the costs? Balance those against the longer repayment cycle and the potentially tens of thousands of dollars you must pay in interest over the life of the loan. More often than not, banks are willing to accept early payment without penalty.
One thing to look out for is how the lender treats your extra payment. A common mistake is that individuals send in the extra payment without any directions for the lender. As a result, they think that you are just advancing next month's payment. In order to take advantage of early repayment, you need to write on the check, "apply to principle". If you don't, they will simply put it towards the following month's bill. This obviously defeats the purpose as the principle is what you are trying to address.
Once you get things rolling, try to save enough to make a full month's payment each December. In the grand scheme of things, it's not a lot of money but it will have a significant impact on your repayment schedule and amount. One suggestion is to speak to a representative at your lender to see what types of accelerated repayment programs they offer. Even though this is a great option, it's not one that is widely publicized.
When thinking about your debt remember that you want to only focus on the monthly payments with an eye towards finishing early. Don't let a large amount of debt prevent you from restructuring today. Student loan consolidation is one option, extra principle payments are another. You can pay off your debt and lenders are willing to work with you. Take advantage of available resources and make repayment a habit.
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