The challenging task of securing a job after graduation is frequently multiplied by the onslaught of your study loan payments. Well, be aware that hiding from lenders, though it may seem a good idea, isn’t working. Lenders will ultimately always receive payments, be it through wage garnishments or threats of ruining your credit score.
Fortunately, there are some programs to help both federal loan and private loan borrowers with repaying their loans and avoid default. The most important thing is that you should cast aside shameful thoughts on your student loans.
On average, more than 65% of college graduates have debt related to student loans and more than 10% have around 100K weighing them down.
It is pretty easy to tell students that taking out loans should be a sort of last resort option, but as more and more families are struggling to cover the ever-increasing costs of college costs, taking a student loan has often become a necessary burden to carry for young adults.
Well, we know that students today will graduate with significantly more debt compared to earlier generations, so they should be very aware of how they later should be able to manage large monthly repayments.
Most important, talk to your lenders. Yes, it’s easy like that. Most lenders are offering a six-month grace period to undergraduates. You shouldn’t wait until that grace period is over but contact them immediately to see what your monthly payments are, or to decide to consolidate. If you have still some exams to finish, and if these are multiple choice exams, check out this post with very useful tips.
This sort of tasks take time, maybe even up to two months, so if you wait until the grace period is up, you may end up with a few months of unnecessarily high return payments. You rather should ask each the lenders about forbearance, deferment, or any alternative repayment option. Suppose you would get into a worst-case scenario, this way you will at least have some contingency plan.
Not every student loan is created equal. Students having private loans or government loans will quickly learn that federal student loans offer far more flexible options for repayment. See also this post about the American Banking System and Studying Abroad. Federal loans come with deferment options which are allowing students to postpone their payments if they end up in situations like continuing education, unemployment, or military duty. when students do not qualify for a deferment, the logical next option is a forbearance.
Forbearance means a student’s current finances are taken into account and this reduces or postpones payment in line with that information. It is important, though, to be aware that if a student is in forbearance, the interest on the loan will continue to accrue, yet, if making your payments is really problematic, you can very well take advantage of this sort of opportunities. Both forbearance and deferral options are available only for a certain length of time, so check with your lender for details.
If forbearance or deferral is not possible or available, as is the case with quite a few private lenders, you should ask them about various repayment options. There are lenders that offer tiered or graduated repayment programs.
This sort of alternatives will allow you to repay your loans in smaller increments. These options are often the best solution for those young graduates who just secured their first job and are still struggling to balance their finances that come with living independently.
At this stage, talking to your lender may prove to be monumental. Be a hustler! It will depend on your chosen profession, but a lot of graduates may qualify for making smaller payments or even a loan forgiveness program. Several low-income and non-profit professions, for example, social workers, may qualify for this sort of programs.
Now about loan consolidation. If you have multiple loan accounts and lenders, you should inquire about loan consolidation and don’t forget to disconnect your emotions. Consolidating loans means that students combine their accounts, to make one payment rather than several. There are situations that students are eligible for an extended loan period, which means that they can effectively lower their monthly payments.