College graduates face loan repayment in as little as six months after their graduation, whether they have a job or not. When the first repayment letter arrives, the payment amount causes many borrowers to panic, since the average student loan payment is $280.00 per month. That’s an amount that can be difficult to swallow if you haven’t worked it into your household budget.
If you’re a recent college graduate, here are a few tips for ways you can prepare yourself to pay your student loans when the first payment date rolls around.
Why It’s Important to Know Your Loan Terms
The first step in being able to repay your loans on time is understanding your loan terms. Basic loan terms that you should understand include:
- Your principal balance (the amount of your loan)
- Your interest rate
- The length of your standard repayment plan
- The due date of your first payment
In addition to these terms, you should also be familiar with the company that holds your student loans, how to contact them, and how to make your payments. Understanding these important factors should enable you to feel more confident once you need to speak to the loan company about your repayment options.
The Importance of Understanding Your Repayment Options
One thing many students don’t realize — and many loan companies don’t make well-known — is the fact that there are multiple repayment options for student loans. If you can’t afford the initial payment amount, one common repayment option is to extend the life of your loan. Extending the loan can help to lower your monthly payment, although it will increase the amount you pay over time.
In addition, there are many repayment options that are based on your life situation. All federal loans have income-based repayment plans. Likewise, some loan companies offer the opportunity to defer their loans or make interest-only payments if you absolutely can’t afford your payments.
Establish a Budget To Make Your Payments On Time
Once you understand your loan terms and repayment options, it’s time to make sure you can pay your loans on time, every time. Making late payments can hurt your credit score and impair your ability to obtain other private loans in the future. The best way to ensure you can make your monthly payments is to establish a budget with your student loans as a priority. Many financial experts suggest using a cash-only budget or taking advantage of budgeting apps that are available on both iPhone and Android devices.
If you find you can’t afford your monthly payment after establishing a budget, it might be necessary to seek additional sources of income or look for other methods to repay your debt.
Why You Should Look for Additional Income Sources
Many college graduates resort to second jobs or “side-hustles” to help repay their student loans. Gig jobs such as driving for Uber or Lyft, doing freelance work, or selling items online can produce viable sources of income that help to repay student debt. According to research, nearly half of millennials have second-jobs to make ends meet.
If you have a family or other responsibilities, taking on a second job might not be a possibility. In those instances, there are other options available to settle your student loans. If you’re having a hard time repaying your student loans, working with a debt counselor or private attorney might be an option you need to look into.
Reduce Your Student Loan Debt With McCarthy Law
At McCarthy Law PLC, we are dedicated to helping individuals get out of student loan debt with debt settlement. Debt settlement is when your creditor accepts a significant reduction in what you owe. If you’re facing student loan debt and are not sure where to turn, let the attorneys at McCarthy Law PLC help you. We are qualified debt lawyers who believe that finances are a personal matter. When you meet with us, we will not judge your situation. Instead, we will work to help you come to a solution that gets your finances back on track.
To schedule a free consultation, call McCarthy Law PLC at 855-976-5777 or contact us online today. We are looking forward to helping you find a solution to your student debt.