As the cost of higher education in the United States continues to rise, so too does the amount of debt that students are taking on to pay for their degrees. For many students and their families, taking out loans is the only way to finance a college education.
Are you in that position right now? Do you not have another option if you want to finish your studies? Are you feeling under pressure and lost as to where to turn next for support with making repayments?
If so, you’re not alone as many students are facing the very same dilemma. Let’s take a quick look at how you can get ahead when it comes to making repayments and getting back on your feet.
Use a Budget
If you’re struggling to repay your student loans or exhibiting other signs you have too much debt, creating a budget can help you gain some control over your debt.
By identifying your income and expenses, you can create a spending plan that will allow you to make your loan payments and still cover your other essential expenses.
A budget can also help you see where you may be able to cut back on spending to free up more money for repayments. If you’re eating out frequently or you’re paying for a subscription you don’t need, cutting back on these expenses can give you extra cash to put toward your loans.
If you don’t know how to create a budget, take the time to learn what you need to do to track your income and expenses properly. There are apps available or you could use a simple spreadsheet formula.
Look for Scholarships and Grants
One way to ease the burden of student debt is to find scholarships and grants that can help cover the cost of tuition. There are many different types of scholarships and grants available, and there are several ways to find them.
One place to start your search is with your school’s financial aid office. They can provide information on scholarships and grants that are available from your school or other sources.
Then, look online for scholarships for college students. You may be eligible for funding that will allow you to finish your education and get qualified without you having to take out additional credit.
Pay Off High-Interest Loans First
Paying off high-interest loans first can help with student debt. By doing this, you can save money in the long run and get back on your feet faster. If you have more than one student loan with different interest rates, it may make sense to pay off the one with the highest interest rate first.
This can save you money over time as you will be paying less interest. If you are struggling to make the agreed payments, there are options available to help you.
You can contact the lender to discuss your options and find a plan that works for you. There is also information available on repayment assistance programs that can help make your payments more affordable and manageable.
Consider Consolidation or Refinancing
Many students go down the route of consolidating or refinancing. While both options can help make your monthly payments more manageable, there are some key differences to consider before making a decision.
Consolidating your student loans means combining multiple loans into a single one with just one monthly payment. This can be a good option if you have multiple loans with different interest rates and repayment terms.
Consolidating can also make it easier to keep track of your payments and stay on top of the overall balance. However, it’s important to note that choosing this option will not lower your interest rate.
Refinancing, on the other hand, involves taking out a new loan to pay off your existing balances and the big benefit of this option is that you’ll be able to secure a lower interest rate. That said; be sure to compare offers from multiple lenders to find the best terms and interest rates for you.
Keep in mind that refinancing federal loans may result in losing certain benefits, like deferment options and income-driven repayment plans.