Be it college or graduate school; a student loan can be a big investment in your future. But if you don’t handle that debt correctly, it could burden your finances for years to come. When do you start paying a student loan back? Well, it depends on many factors. Here are some tips for paying back those loans:
Make a Budget
The first step you should take when paying back your student loan is to create a budget. The best way to do this is by using an online tool that can help you monitor your spending habits, like Mint or Personal Capital. Once you have a budget and set up automatic payments for all of your bills, including student loans, it’s time to put together a payment plan that works for you.
Consider Refinancing
If you have a choice between refinancing your Federal Direct Student Loan and other types of student loans, the best time to do so is before entering repayment. The reason for this is that interest rates are generally lower on a Federal Direct Student Loan than they are on private loans. Refinancing your loan when you have no payments yet to make can help you save money over the life of your loan.
However, suppose you already have some payments made on your federal direct student loan. In that case, it may not be as advantageous to refinance at this point in time because there could be early repayment penalties involved with doing so (this is dependent on what lender you choose).
Think About Getting a Side Job
If you have time and you’re looking for a way to make some extra cash, consider getting a side job. You could look for something part-time, like working at the local supermarket or Starbucks during peak hours. Or there’s something else you can do from home; many people get into selling items on eBay or Amazon. If that doesn’t sound appealing to you, there are other ways to earn money outside of your 9-to-5:
• Think about getting a second job.
• Look into opportunities in freelance writing or editing (this is a great one).
Set Up Automatic Payments
Automatic payments help you avoid missing a payment and save you money on interest. Automatic payments are set up so that each month, your student loan servicer will withdraw the amount of money needed to pay off your balance in full.
If you were to set up an automatic monthly payment plan with each installment being the same amount, there is no risk of any late fees or penalties because the bills are paid on time.
SoFi professionals say, “The payback terms on pvt student loans are set by lenders, which might not offer a grace period.”
It’s important to remember that automatic payments do not cover interest accrued on top of what’s already owed. However, they can be useful if you want to avoid late fees or other penalties because they ensure that your loans are always paid off in full at least once every month (and sometimes more often).
You can make extra payments if you can afford them, consider refinancing your debt at lower interest rates (if possible), get a side job or part-time job that helps pay off the debt faster—and all of these tips will help relieve some stress while helping you out financially in the long run!
