Most people who are through with college have challenges in repaying their education loans. They have no idea on how to tackle this issue since they never thought of it on admission. Young people joining college mainly focus on networking and socializing. There is hardly any thought given to the student loan. Just as they go about their college life, they should plan for the subsequent loan repayment after their studies.
Below are five steps that can help them in repaying their student loan:
Know the amount to be paid
This is an important step towards repaying your loan. Knowing the exact amount to be paid enables you to calculate the percentage to be paid, against your income. A comparison of your monthly income and the loan to be paid is necessary to enable you determine your budgetary outlook.?If the payment is relatively low for instance 7% of your monthly income, you have the ability to pay and sustain your monthly budget. A loan above for example 40% of your monthly income may pose a challenge to pay. You may consider the following;
Change your payment method
This is worthier than abandoning the whole payment process. Loan defaulting exposes you to tax agencies.?Involvement of tax agents hurts your credibility and may be more expensive in the long run. Your financial integrity may be questioned at one point in life. How would you feel if financial institutions denied you a loan just because you failed to pay your student loan? It can be that embarrassing.?Through the income based repayment (IBR) program, you can re-schedule your payment plan whereby a 15% deduction of your monthly salary goes towards settling your student loan. Under this arrangement, your payment period is prolonged to 25 years. This means that you incur a higher interest. What would you prefer, a relatively higher interest or involvement of the federal loan agency??It is worth noting that several private financial institutions have such an arrangement, even though federal loans are the ones most common with the IBR program.
Understand your rights and alternatives
In the event that you are unable to submit your payments, be aware of existing rights protecting you against harassment. You may either forbore or defer your payment. Forbearance is where your lender agrees to give you a certain period of time within which you make no payments. This is mostly suitable if you do not have a job. It should be communicated to the lender that you will not be able to submit in the payment. Do not just ignore since this is a courtesy based arrangement.
If you are unemployed, in the military or in the graduate school, the better option would be to defer your loan repayment. This means that you are not yet in a position to make the payment. The interest does not accumulate under this arrangement.?The Public Service Loan Forgiveness Program comes in handy to those who have worked as public servants for 10 years. The trick in this program you must have consistently made payments during this time. The remaining loan balance is forgiven by the state.
Planning
It is important to plan in every undertaking, mostly in financial matters. The plan fails if you fail to implement it to the latter. You should seek support from people you are close to, explaining to them the effects of this arrangement. It may call for less home budgetary allocation, it is just as important to let them know.
The web is another tool you can use in managing your payments by using it to remind yourself of the progress you are making. There are a number of on-line jobs that you can engage yourself in to earn that extra dollar to finance your budget or pay your loan. The repayment period may be less than that initially thought.
Maintain optimism
Set your mind to always think positively no matter the situation. Loan payment has its own challenges, some that may prove too hard to overcome. Stick to your plan; be optimistic that all will end well. Your ability to persevere during such trying times will determine your success story. Therefore, appreciate the challenges as pat of life and keep that hope alive!
Source: http://studytect.com/5-steps-to-deal-with-student-loans/
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