The How To’s of Paying Off Student Loans

Congratulations! You graduated. And you, like countless of other graduates, have pretty outstanding student loans to pay back. Although there is no magic button, there are a few smart money tricks to help along the process.

Firstly, take advantage of the fact that many loans do not need to start being paid until 6 months after graduation. This alleviates some pressure, but not all of it. Depending on the type of loan, interest may or may not accrue during these months. There is never any harm in paying both interest and principal before you need to.

Secondly, you may qualify for a loan deferment of forbearance. Deferments and forbearances mean that you do not have to pay off any of the loan for a specified period of time. Interest may or may not accrue, depending on your loan company. You must apply and qualify for a deferment. Reasons for qualifications include economic hardship, unemployment, enrollment in school, teaching certain under privileged populations (such as Teach for America), working in health care professions, or certain volunteer services such as Americorps.

Thirdly, there are a few ways to receive debt forgiveness. Programs like the aforementioned Teach for America often forgive a percentage (albeit not a very large percentage) of student loans. Of course, it is important that they offer forgiveness as the salaries are not competitive enough for you to be able to pay off your student loans and live comfortably.

Fourthly, try to pay more than the minimum. The more you pay per month, the less you pay over all. A huge part of making this possible is living slightly below your means. Having an inexpensive rent, not eating out frequently, and limiting unnecessary spending are all factors that help you put a little more towards loans. Paying off loans in a shorter term period of time is like investing in your long term future. The more principal you pay off monthly, the less amount of interest you pay off in the long run.

Lastly, never be afraid to call your loan company to see what they can do for you. They are there to help–and to make sure that you do not default.