This week, let's talk about those student loans!
(If you don't have student loans, you can apply some portions of this assessment to any other debt you might have).
Approximately 70% of graduates leave college with some sort of student loan and many are of the mindset that student loan debt is really not a priority because:
- They can be deferred
- They may be forgiven
- The interest rates are typically much lower than other types of debt e.g. credit cards
- They have plenty of time to pay it off based on the payment plan they are given by the loan holder
Well......if you've ever had the above mindset, its time to change things. Your student loans are a part of your overall debt portfolio which means like your credit cards, you should have a plan to pay off these loans are early as you can so you can save your self a ton of money interest and the good news is that You CAN pay them off. It's all about being committed and establishing a plan.
To ensure you stay on top of your loans and can pay them off quickly here are a list of things you need to do:
1. Review your loan history
Pull out the details of all the student loans you might have and also check your credit to see what is listed on there under your student loans.
2. Determine your loan balances and interest rate
By determining your balances and associated interest rates, you can create a debt prioritization and payment plan specific to your student loans (see week 6 for a refresher).
3. Set up online payments for your loans
Doing this where possible will make paying your loans so much easier to manage and also to track.
4. Review the terms of any deferred loans
If your loans are deferred (e.g. before you graduate or find a job) confirm exactly when you need to start making payments. Also, if you are currently paying down your loans do not defer them unless you absolutely have to (i.e. change in financial situation).
5. Build your student loan payments into your budget / Plan to pay more than the minimum
By doing this you are including your loans as one of your bills that you pay every month and will be able to make consistent payments. Also paying more the minimum (as much more as you can), will allow you to pay off your loans sooner and save money on interest.
6. Make sure any additional payments are being allocated correctly
If you are able to make more the minimum payments on your student loans you want to make sure your additional payments are being applied to your principal and not to the interest otherwise you'll never see your balances go down so review your statements, login to your accounts and if necessary call your creditors to ensure your additional payments are going towards your principal.
7. Consider loan consolidation
Loan consolidation may be an option for you BUT it’s very important that you fully understand the terms specifically around loan forgiveness, repayment flexibility, and the other options associated with your federal or private loans. You should also determine if consolidating will actually save you any money before you make the decision to consolidate.
8. Create loan repayment scenarios
This will help you determine how soon you can feasibly pay off your loans. Check out this calculator HERE
9. Find out whether you are eligible for loan forgiveness based on your employer (or future employer)
Many employer types offer loan forgiveness programs and examples include military personnel, teachers, nurses, child care providers etc It's definitely worth the time to do research to see if your employer offers such a program. If you are currently job hunting, you can plan to apply to jobs where forgiveness programs are offered.
Your challenge this week is to use the downloadable checklist based on the list above to do an assessment of your student loans to make sure you are on top things and have a plan to pay them off.
P.S. Don't forget to share your progress in the Facebook group!
It's week 20 of The 26 week savings challenge!
This week, your savings deposit amount is $79.00
(If you've been consistent with your deposits, this week's deposit will bring your balance to $820!)
- Make your transfer.
- Check off this week's amount on your savings challenge schedule.
- Share your progress in the Facebook group!
Note: This challenge will be on-going throughout this accountability program in addition to your other weekly challenges.