Mistakes to Avoid When Paying Student Loans
Avoiding Refinancing
If you have been putting off refinancing your student loan you are making things harder on yourself. If you have high interest rates and can’t seem to make a dent in your student loan balance due to interest, refinancing can help. By helping you negotiate a lower rate and better terms you can pay off your debt quicker. Not to mention that you might even be able to negotiate your remaining balance if interest rates have piled up over time. Refinancing is a good option for those who graduated years ago but still have payments bugging them. Be sure to contact a trusted financial advisor to discuss more.
Avoiding Consolidation
If you have been avoiding consolidation due to the confusion surrounding it you might be missing out on paying off your loans quicker. Consolidation takes all your debt and puts it into one easy monthly payment. This is a great option if you have student loans and credit card debt, of if you have loans from several different institutions, such as a private student loan and an unsubsidized student loan from the government. Consolidating can make payments easier to keep track of and might even lower your interest rate. Consolidation is a hard process but finding the right people can make it easy.
Missing Payments
If you are missing payments, you are putting yourself at a disadvantage. Missing student loan payments can set you off track and make it even harder to pay them off. Don’t avoid student loan payments even if it means sacrificing a night out with your friends or a new car. Until these loans are paid off, living in your means is a must to avoid sky high interest rates. After all, bankruptcy can’t eliminate student loans but student loans can make you bankrupt. Any time a payment is missed it can also impact your credit score and raise your interest rates.
Not Making Larger Payments
If you have student loans you don’t just have to meet the minimum balance. Instead, any time you get extra money, you can put it towards your balance and help erase it further. You can even set aside a larger amount of money every month to help lower your balance and get to a point where you become debt free. Many people just pay their monthly payments not realizing how much interest is being added. In some cases, you may just be paying off the interest every month making things harder on yourself. Check to see how much of your payments go towards interest, and how much go towards the loans.
Not Finishing Your Degree
If you have student loans and don’t have a degree you are at a disadvantage. Without finishing your degree, you might not be able to get a higher paying job that would make paying off your loans easier. If you are close to being done, taking out additional loans or getting financial aid can help you finish your degree and get a job where you can pay off debt easier. Some even move back home to do this. After all, if you are paying student loans you should also have a degree or at least be pursuing one to make them worth the payments.
