To pay off your student loans, try to keep your monthly student loan payment at 10% or less of the net monthly income you plan to earn after finishing school. (Your net income, or take-home pay, is the amount you earn after taxes, insurance or other costs that have been deducted from your gross income, the total amount you earn)
If you are not sure what your expected net income will be, assume that your net income is 20% less than your expected gross income How much do you think you can handle in monthly student loan payments? Use the payment calculator on the Federal Student Aid website ( studentaid.ed.gov ) to calculate your monthly payment on federal student loans. Be realistic about what your salary will be after graduation. Before borrowing, estimate how much debt you can handle without causing a lot of financial stress. Never borrow more than you need and try to keep your payments as low as possible. PAYING YOUR STUDENT LOANSWhen it comes to making student loan payments, your main goal should be to make payments on time and save on late fees. Here are some tips to make making your payments a little less difficult. Get your title. Students who complete their studies are less likely to have trouble making their monthly payments. A college degree can lead you to a higher paying job and open the door to a new career path. HOW TO POSTPONE STUDENT LOAN PAYMENTSStudent loans are legal obligations. The money you borrow must be repaid, with interest, like car loans and mortgages. If you have financial problems that are making it difficult for you to pay off your student loans, don't panic, but contact your lender. They can explain your options to help you avoid problems with both late payments and defaults. A helpful first step: exit counseling If you have Federal Stafford Loans, you will need to complete exit counseling shortly before graduation, retirement, or if you do not maintain part-time student status. Exit Counseling provides you with information on managing your student loans when they are due. Check with your school to see if you can complete your assessment online or if you need to do it in person. When are the payments due? With most student loans, you start making payments six months after you graduate, drop out, or — for federal loans — if you do not maintain part-time student status. You will receive your first statement about 20 days before your loan enters the repayment period and your first payment is due. Can payments be postponed? There may be ways to temporarily postpone your payment if you are having financial difficulties, going back to school or serving in the military. The two most common ways to temporarily postpone paying your loans are by deferring and reducing payments for a specified time. These can help you not fall behind on your loans. If you are already behind, your lender may have options to defer or reduce payments for a specified period of time to prevent your loans from going into default. Both deferring and reducing payments for a specified time allow you to temporarily stop making payments, or make smaller monthly payments than are required by your payment program. The deferrals are for federal loans only. A postponement is a right, which means it must be granted to you if you meet specific conditions. Examples of deferrals for federal loans: Hardship deferral You must earn less than the federal minimum wage or exceed the federally defined debt to income ratio. Deferral while you are studying If you go back to school after your loan enters the payment period, you may be eligible for a deferral while you are studying. If you have Federal PLUS Auto Loans for Students with low income and professional students, your lender will grant you this deferral after your loan is disbursed. Must be enrolled at least as a part-time student at an eligible educational institution. If you are attending an educational institution outside the United States, you must be a citizen or national of the United States. Unemployment Deferral You must be looking for a full-time job, but cannot find it. Full-time employment is defined as at least 30 hours per workweek that is expected to last for at least three months. Education-related postponement You must be participating in a research grant or graduate internship / residency program. Deferrals are for federal and private loans, and are granted at the discretion of your lender; you are not automatically entitled to them. And the interests? Interest continues to accrue during a period of deferral or reduction of payments for a specified time. (Federal Subsidized Stafford Loans are an exception: the government pays interest that accrues during an authorized deferral period.) You are responsible for paying the interest that accrues on an unsubsidized student loan (federal or private) when your loan is in deferral or reduced payments for a specified time. You can make interest payments while your loan is in deferral or reduced payments for a specified time. Otherwise, it will be capitalized (added to the principal balance) when your deferral or reduction of payments for a specified time ends. Since interest continues to accrue, you may end up increasing the total amount you pay. However, paying more over the life of the loan outweighs the long-term consequences of default and late payment. Plus, putting off your student loan payments could increase your monthly cash flow, which can help you manage day-to-day expenses like rent, insurance, and even food. Rather than postpone, are there other payment plans? Talk to your lender. You may be able to choose a different payment plan that suits your financial situation. You may be able to lower your current monthly payments with a plan that allows you to pay interest only, base your payments on your current income, or that allows you to make smaller payments now and larger payments later. Would consolidating my loans help me? For more information, read the Advantages and Disadvantages of Loan Consolidation article . Contact your lender Remember, if you are having difficulty paying your student loans, it is important that you contact your lender as soon as possible to discuss your options. They will be able to answer your questions and help you deal with your specific circumstances. Comments are closed.
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