Tips for Paying Your Student Loans [Sponsored PSA]
April is Financial Literacy Month and to commemorate the month, we wanted to help provide students and parents with tips for paying their student loan debt. These tips are great for soon-to-be, current, and former college students as it’s never too soon or too late to start preparing for a strong financial future.
The first step in reducing your debt is knowing how much debt you have. Seeing all of your loans written in one place can help you become better informed when making your plan to reduce your debt. As you begin to formulate a loan reduction plan, remember that it is recommended that you pay any additional available funds to the loan with the highest interest rate first to reduce the amount of interest you’ll pay over the life of your loans.
Even if your payments are not due until after your grace period (that is the amount of time you have before your payments are due) making payments of any amount can help reduce the total amount you’ll end up paying over the life of the loan.
Any extra funds that come your way should be put towards your debt. After your accrued interest is satisfied, additional money can be applied to principal instead of advancing your due date, if you request it in writing. Double check with your lenders on their specific policy guidelines.
By making additional payments towards your loan principal, you are applying this amount to your loan balance, helping you reduce the amount you owe faster. If a lender advances the due date, interest continues to accrue, a bill may not generate, and your next payment will satisfy interest before reducing your principal balance. It’s best to make a payment at least every 30 days and include extra when possible.
Consider Automatic Payments
Automatic payments is a service that is offered by many loan providers where they will automatically deduct the amount of your payment from your bank account at the same time each month. As long as you have enough money in your account each month, your payment will always be on time, allowing you to avoid any late fees being added to your loan payment.
Besides avoiding late fees, some lenders may offer an interest rate discount when you elect to make payment automatically. So be sure to ask your lender that question! Reducing your interest rate is another way to save on the total cost of borrowing.
Still Have Questions?
If you have questions or need assistance with how to pay back your student loans, feel free to contact our Student Loan Specialists for free advice and support at email@example.com or 800-922-6352.
Kate Leveille joined the MES team in May 2012 as its College and Career Access Program Director. Her primary role is to assist in increasing college access awareness and to support Maine students and families, helping them to achieve their post-secondary education goals. She currently serves as a member of the Board of Directors for The Jump$tart Coallition of Maine as well as a Steering Committee member for Maine College Access Network, also known as MaineCAN!