It's very common to leave school and enter the world of work with student loans. Here are some tips for paying them off as quickly as possible and keeping them under control.
1. Consider Income-Driven Repayment Plans
Chances are good that if you have just left college, you're not going to be working your dream job and making tons of money. You are likely going to be working an entry-level position or a temporary job that is not related to your field while you look for more permanent work. This can be difficult if you have many different student loans that need to start being paid off within a few months of graduation. One way to deal with this is to consider an income-driven repayment plan. You have two main choices when looking at this type of plan.
The first choice is the Pay As You Earn Repayment Plan (PAYE). This type of plan has you pay 10% of the income that you earn that is not earmarked for bills, rent, or transportation, or food. This is helpful because it allows you to only pay your student loans back as you have the money for them, meaning that as you make more money, you will start putting more money towards your student loans and will start paying them off more quickly, but your payments will remain reasonable while you are not making tons of money. At the end of twenty to twenty-five years on this plan, if you haven't paid off the entirety of your loans, you debt is forgiven.
The second choice is the Income Based Retirement Plan (IBR). This is when you pay between 10% and 15% of your discretionary income, or the income that is not set aside for necessities. Your loans are not forgiven at the end of any period of time.
Talk to your lender about which type of repayment plans you are eligible for.
2. Keep the Government Informed
If you have government subsidized loans, you can often defer them for legitimate reasons, such as an illness, a problem with your family, or some other crisis. By keeping the government informed, you can temporarily stop paying off your debts without accruing more interest. This is a good option if you run into serious financial problems because those serious financial problems, once resolved, will not be able to affect your future through your loans.
For more information, talk to a company such as Financial Guidance Center that specializes in helping people pay off their debts.