Many people are still paying off debt that they have incurred over the years as result of taking out student loans, even years after they have graduated. Student loan debt seems inevitable; however, students and recent graduates can take a number of cautionary steps to keep their debt in control and to ensure that they are paying off their loans efficiently.
Understanding your debt is the first step to keeping loan payments in control. For example, do you know your lender, the balance on your debt, your repayment status, or your grace period? Staying in the know about your loans and keeping in touch with your lender can save you a bundle. If your lender needs to contact you and your information or addresses are not current, it could end up costing you!
The Project on Student Debt outlines some helpful information about reducing student debt – pick the right repayment option, lower your principal if you can, and consider a consolidation loan. A standard repayment plan spans 10 years, but can be changed down the line depending on your needs. Keep in mind though, that the longer your repayment plan, the more interest you will be paying! Also, whenever you can afford to pay more than your minimum payment, do it! Making a larger payment will lower your principal – and reduce the interest you will have to pay over the life of the loan. (Read more from the Project on Student Debt, here.)
Aside from staying educated on your student loan debt, there are also several other option available to reduce student debt. The Income-Based Repayment program, for individuals with a high amount of debt relative to earnings, allows for reduced monthly payments and forgiveness of the loan after 25 years. In addition, service programs such as Teach for America or Peace Corps, have benefits such as partial cancellation of loans for participants. Those working in the public service sector may also qualify for programs like the Public Service Loan Forgiveness Program.
Regardless of the amount of debt you have, there are many options out there that can help to reduce student loan debt. By staying educated and understanding your loans and repayment options, making timely payments, and researching venues for loan forgiveness, you can set yourself up to repay your loans efficiently and on schedule.