You've graduated from college, got a good job doing something that you love, have even gotten married and started a family, but there is one thing that is still hanging over your head: student loans. There are not a lot of people who make their way through college without obtaining some sort of student loan. The average college graduate has $17,000 in student loans. No matter if your student loan is only $5,000 or $50,000, here are the best ways that you can pay off your student loans and finally break free to financial freedom.
The first thing that you need to do is to figure out how much you exactly owe on your loans and who you owe it to. Once you graduate from college and your 6 month grace period is up, it can be a real shock to see what your monthly payments are and how it is going to take you to pay the money back. Take a look at all the contracts that you signed (which hopefully you kept). Figure out what type of loan you got, whether it is a federal loan like the Stafford loan or a private loan from a credit institution. If you don't have the contracts, then gather up each one of the statements that each institution sends you every month and add it up that way.
Here’s the thing about student loans: they never go away. Even if you file for bankruptcy, you still have to pay your student loans back. The only way that you ever get rid of this debt is if you die. Even though you can't get rid of student loans there are ways that the government will grant you a loan forgiveness, but you have to put some real time in to get this kind of forgiveness. If you choose to volunteer with AmeriCorps for a year, you are given a credit of almost $5,000 towards your student loans. VISTA (Volunteers in Service to America) will also reward you with $4750 in student loan money if you devote 1,700 hours of time to them. If you decide to join the military, not only can you serve your country, but you can be eligible for up to $10,000 in student loan money. National Health Service Corps gives you an awesome deal on your student loans if you are willing to practice medicine in underserved areas that they designate. There is also loan forgiveness for lawyers and physical therapists.
Once you know what your total student loans are and you know what your monthly payments are, you need to look at your current financial situation. If you were lucky and were able to land a decent paying job right out of college then you may be able to afford to pay extra on your monthly payments to pay off your loans faster. The faster you pay them off, the less interest you end up paying, which means you can save thousands in the long term. If you can afford it, always go with the standard payment option as it will give you the best interest rate and you will be debt free in 10 years or less.
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If you were not so lucky and you don't have enough money to pay for food and your monthly student loan payments then you have a few options. You can try a graduated payment which starts out at a lower monthly rate and then increases as the loan matures. If you are in an entry-level job and know that you will be making more money in the years to come, this type of payment may work for you. You can still pay off your loans within 10-25 years.
Another option which may work for some people, but gets others into trouble is a long term payment. This means that you pay the least amount possible for 30 years. With this type of loan you end up paying double what the original loan amount was for by the time the 30 years is up.
Paying off your student loans is something that you have to do. If you have any questions, you can always talk to your lender or a financial advisor that can help you find the best way possible for you to get rid of that debt in your life.
Tags:
debt consolidation,
loans,
money,
education