Not long after the work of studying, writing papers and taking exams is completed, the task of repaying student loans begins. By analyzing your entire financial situation, you can make repayment decisions that are right for you and position yourself for a strong financial future.
Where Do You Stand?
Depending on your financial situation you may be able to pay off your student loans early. For others, it makes more sense to extend the loan term and focus on paying off higher-interest debts first. When deciding how to tackle your student loans, the first step is to make a detailed budget showing your income, expenses and debt. This will help you understand what you have to work with and where your money is going. If you have a choice between paying off your student loans early or eliminating high-interest rate credit card debt, you’ll likely save money by paying as much as you can on your credit card debt while continuing to meet your student loan repayment obligations.
If you’re struggling with debt, you may be able to temporarily postpone student loan payments with a deferment. Deferment is only accepted under certain circumstances and, depending on your loan, the interest may also be suspended or it may continue to accrue (check Sallie Mae for more information*). Forbearance postpones or temporarily reduces your payments, but whatever the type of loan, interest will continue to accrue. Cancellation of part of your loan may be an option if you are a member in a uniformed service, teach or provide services to needy populations, or work in a health care profession or law enforcement.
If you’re feeling overwhelmed by your student loans contact your bank or credit union about loan consolidation options. They may be able to help you lower your monthly payments by combining several loans into one packaged loan and extending the repayment period.