Managing federal student loan debt doesn’t have to be difficult. There are tons of strategies borrowers can use to manage debt effectively. In the United States, there are millions of people who took out federal loans. The problem is that most people are not aware of the numerous debt management strategies that can save them money. These strategies can be as simple as making an extra payment toward your loan every year. Anyone can learn skills that can help them save money and reduce debts. All it takes is following an effective plan.
FEDERAL STUDENT LOAN DEBT MAKING LOAN PAYMENTS
A lot of borrowers are focused on making one payment each month during their terms. This isn’t a bad strategy at all, but there are potential savings they could be missing out on. For example, if a borrower with a $10,000 loan over a ten-year term made just one extra payment toward every year, they could potentially pay off their loan almost a year early! They would also save themselves from paying an extra two hundred dollars or so in interest that would have accrued during their regular payment schedule. Just setting aside $10 or $20 each month will likely be enough to make an extra payment every year.
STAYING WITH THE LOANS ORIGINAL INTEREST RATE
Refinancing a loan may seem intimidating, but it’s usually easier than it’s hyped up to be. When borrowers refinance, they’re essentially starting with new loans. This process involves the new lender ‘buying’ the loan from the old lender. Borrowers can sometimes qualify for lower interest rates if they refinance, which can save them more money. Refinancing can be a great way to save money and reduce debt.
PAY MORE THAN THE MINIMUM PAYMENT
Sometimes the minimum payment option may sound like the best way to go. However, this isn’t always the best idea. The problem with this strategy is that interest is still accruing. Generally speaking the longer borrowers are making payments for, the more interest they’ll end up paying. If people pay more than the minimum amount, they’ll be able to pay off their loan quicker and will likely pay less interest overall.
APPLY FOR FEDERAL STUDENT LOAN FORGIVENESS
What if the government had a program that paid people back all of the money they spent on their federal loans? That would be too good to be true, right? The government has a program exactly like this. There are some requirements borrowers have to meet to receive federal student loan forgiveness, but it is possible. For this reason, it’s usually a good idea for federal loan borrowers to apply for loan forgiveness.
Federal student loan debt can sometimes be intimidating, but with the right plan, it’s possible to manage everything effectively. If you have questions about student loans or are interested in learning more about loan forgiveness we would be happy to talk with you anytime. Feel free to contact us here.
Hope Credit can provide you with student loan professionals who can get you through the fear and doubt.
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Sources:
Friedman, Zach. (2018, October 16). Here Are The 5 Biggest Student Loan Mistakes Of 2018. Retrieved from https://www.forbes.com/sites/zackfriedman/2018/10/16/student-loans-mistakes/#1eb6d5c953e0