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The majority of university students have forever dealt with student loans. Past students may still be trying to pay off their loans while current ones may feel swamped with the amount of money they will have to pay. Luckily, there are many resources online that have great information for students on how to deal with loans and get rid of them as quickly as possible. Here is a consolidated guide on student loans:
- Many experts recommend consolidating loans, and it is something that students should look into, especially if juggling multiple students loans. It combines them all into one loan that can be paid off through one payment per month rather than multiple. This is a huge benefit that can save you money through a plan that better fits your financial needs. Keep in mind that you may end up spending more money if you choose a longer payment schedule, and it may be required that you have a locked interest rate, based on your multiple loans.
- Interest rates play an important role in deciding whether to consolidate your loans. Federal loans are presented with fixed rates which establish how much you will be paying throughout your loan schedule. Private loans are subject to change depending on whether they are a variable or a fixed rate loan. Both have pros and cons, but again what is important is that you find a payment schedule that best fits your schedule.
- An example of a strategy that can be used when paying off student loans is to pick the shortest payment schedule that you can manage. The longer the payment schedule, the more money in interest you will end up paying, which in most cases will lead to paying off way more than you borrowed.
- Attempt to pay more than you need to each month as well. That little amount that you add on to your monthly payments will save you money in the long run and get that loan paid off more quickly. Prioritize the most expensive loan too if you haven’t consolidated your loans, because again, you will save money and time due to the higher interest rates on that loan. Contrarily, you can prioritize your smallest loan to pay it off as quickly as possible. This will save you the most time in the long run because of how long the small interest rate schedule is.
- Look for student discount and loan forgiveness options if need be. Those small breaks will help you even if the discounts are very minimal. Loan forgiveness should only be used as a last resort option as it does come with some important clauses.
Student loans remain extremely common with the university population today, and will certainly be an important factor for students in the future. Consolidating federal loans is an option that can help students manage their finances while not impacting their financial situation due to locked interest rates. Private lenders can either save or cost you more money depending on the rates you choose. At the end of the day, pick the schedule and tips that fit your needs and will benefit you the most, in the area you wish to benefit the most. Just remember to always read the fine print.
Find out more about Loans and Consolidation from The Simple Dollar.