In our last blog post (read it here) we discussed how grace periods after graduation can adversely affect your loan and payments. Now, to help our blog readers further understand the loans they have taken out we are going to discuss ways to minimize the student loan debt they owe upon leaving school and entering the workforce.
We aren’t trying to be condescending; of course, making payments will help reduce the amount you owe. However, that isn’t what we mean—or at least, not all that we mean.
While most federal student loans are not required to be paid off until after you graduate, some still accrue interest while you are in school and during your grace period. That is a lot of interest just waiting to be added to your student loan debt.
Here are a few ways and times you should be making payments towards your federal student loans (aside from when your obligation to do so begins).
- While you are in school. Since your loans are not due, making payments during the years you are enrolled in school can only be beneficial. There is no minimum monthly payment you have to make, so whatever you choose to pay goes towards your principle balance and interest. This can be done a number of ways.
- Save some cash by properly budgeting or using these unique money saving tips and apply what you save as a payment.
- Paying $10 to $20 per paycheck. This is an average amount college students may pay for a meal, caffeine, or other small purchase that is often easy to make without breaking the bank. Paying $10 every two weeks you are paid (that’s about 26 paychecks per year) amounts to $260 per year towards your student loans. Over four years of education, that’s over 1k in student loans you won’t have to worry about (or accrue interest on).
- Talk to your employer. Many companies are looking for more innovative ways to retain good employees. Offer student loan debt relief or tuition reimbursement are some of the benefits beginning to grow in popularity. Take advantage of any and all benefits provided to you to reduce your student loan debt. If they don’t offer any of these programs, start a petition among coworkers to have something implemented. The Student Loan Advisory Group has helped several businesses provide student loan debt relief programs to their employees.
- Take advantage of other employer programs. They may not have a student loan relief benefit, but they may offer cash incentives for attending wellness programs. Use the money you save on your health insurance or receive as a benefit to make an additional payment. Sometimes, paying off student loan debt means getting creative.
- During your grace period. The grace period serves to allow graduates to enter the workforce in order to be able to afford paying back their student loans. Begin to budget and start making the monthly payments you will have to make within the next 6 months. This will help you get into the habit of making the required payments and it will help reduce the interest you owe. Even if you cannot manage the full payment yet, attempt to make any size payment. Eventually it adds up!
- Select the right repayment option. Find the right balance of what you can afford as a maximum payment and choose the repayment plan that best fits. Also, consider registering for autopay as many student loan debt servicing companies offer a slight reduction in interest for doing so.
Of course, if you are ever at a loss on how to best handle your student loan debt, contact the Student Loan Advisory Group for student loan help.