Recent grads, have you made your first student loan payment?
If not, it's coming. The six-month grace period of Federal Stafford Loans is ending for May graduates, which means it's time to repay.
Here are a few ideas to start your repayment off the right way:
Pay on time. One of the best things you can do to build your credit history and stay on good terms with your lender is to make on-time payments. Stay on top of due dates by managing your loan online. You can even make it simpler by signing up for automatic payments.
Pay more. A little extra can go a long way when it comes to saving money over time. Each dollar you pay in addition to your minimum payment means one less dollar to pay interest on. The savings can really add up.
Consolidate. If you want to make one student loan payment to one lender instead of several, you can consolidate your federal student loans through the government
and private student loans through lenders like Wells Fargo. Plus, there's an added bonus to private student loan consolidation: You may qualify for a better rate than you had on previous loans if your situation has changed.Talk with your lender. We know some borrowers may have trouble repaying. The important thing is that you talk to your lender about your options. You may qualify for a deferment or forbearance. Or you may be able to pay on an income-sensitive, graduated, or extended schedule.
For those of you already repaying your student loans, what tips do you have on starting repayment on the right foot?
One way to pay a little more is to consider making a half-payment every two weeks, instead of one per month. This works well for mortgages, and I see no reason why it wouldn't work for student loans as well.
It doesn't seem to make sense at first glance: why would two payments per month make a difference, since there are four weeks in a month? Well, look at it this way.
If you make two half-payments per month, you're not making twenty-four payments, because the year has fifty-two weeks; you're making twenty-six payments. That's like making another payment every year, but pretty much painlessly.
One critical thing, though: make sure your lender understands that any overage is to be applied to the principal, not to advance your repayment. My student loan company (I won't name them here, but it wasn't Wells Fargo) kept "forgetting" to apply overages according to my instructions, and gave me a great deal of runaround every time I tried to call them on it. Most companies are reputable, but make sure your wishes are known and followed. If the company won't do as you ask, get a loan somewhere else and pay them off.
Perhaps I just don't want to make the heavy payments of a ten year plan - but aren't student loans some of the cheapest money available when compared to other interest rates?
Phil -- you're right. When you look at some other options for financing college, student loans are generally one of the most affordable options. Obviously, the best way to fund school is with money you don't have to repay like scholarships and grants. But in comparison to other methods, like putting tuition on a credit card, student loans are generally more affordable.