New York, NY (PRWEB) November 21, 2012
With the six-month grace period for federal student loans and some private students loans ending this month for many Class of 2012 grads, now is the time to explore options for student loan debt repayment.
According to a recent report by the College Access and Success’ Project on Student Debt, the average student loan debt for Class of 2011 borrowers rose to $26,500, a 5% increase from $25,350 the previous year.
To stay on top of payments each month and to eliminate debt as quickly as possible, here are four things grads should keep in mind.
Determine Loan Terms/Amounts
While it may be difficult for grads to come to terms with the fact that they now have to start repaying the money they borrowed to fund their college experiences, they should gather all the info they have on their federal and private student loan debt and get organized. This means printing out statements, signing up for automated payments options, and starting to budget their monthly finances to include their student loan debt payments.
Make Payments Consistently and/or pay down additional principle
Graduates with the financial means to pay more than the minimum installment amount due can save themselves a lot of interest expense over the life of the loan. Graduates should prioritize and pay down their highest interest rate loans first if they can afford to do so.
Sign up for the Federal Government’s “Pay as You Earn” Plan
The “Pay as You Earn” Plan allows some graduates to set their federal loan payments to 10% of their discretionary income and then have any remaining balance forgiven after 20 years. Qualified borrowers can apply for the plan before the end of this year and can use the department’s online site (studentloans.gov) to register.
To qualify, grads must have taken out at least one federal loan in or after fiscal year 2012 (Oct. 1, 2011, through Sept. 30, 2012) and no loans before fiscal year 2008 (Oct. 1, 2007, through Sept. 30, 2012 2008). That means only recent graduates or those who are still in school can qualify.
Consolidate Private Student Loans
Graduates who took out private student loans should evaluate if a private student loan consolidation makes sense for them. If students took out more than one private student loan, they may have different interest rates and/or perhaps terms on their loans. Consolidating their loans will not only help save graduates money but also the headache of writing multiple checks and keeping track of their loans in the event that they are sold to other lenders and servicers.