Tips to Pay off Student loan

Posted by nabeelshaukat on February 4th, 2012

Many students, who take out a student loan, assume that a job will be waiting for them after graduation, and that they will be able to pay off a student loan easily. But the reality is a little harsh. The world economy continues to struggle.  Fewer jobs are available to be able to pay off a student loan.  There is fierce competition, more than the students had imagined they would have to confront to get a job. Even if there are jobs to be found, the salaries are not as good as they once were to start a career. So, paying off a student loan has become a difficult problem for many college graduates.

Here are some tips that can help college graduates to pay off a student loan.

Frugal Lifestyle:

You should practice a frugal lifestyle in the early period of your career. Spend only on necessities and you should try to spend sparingly on unnecessary things. By keeping your monthly expenditure low, you will be able to save enough money to pay off your installment of loan.

Pay during the Grace Period:

Usually student loans give a grace period. This is the period during which no interest is accrued on the loan. You should try to pay off as much debt as you can during this period. This will help you keep the cost of interest lower.

Refinance your Student Loan:

If you cannot pay off your debts on time, you should consider refinancing or rescheduling your loan by another bank. You should be very careful while taking this decision. You should get complete information about refinancing and carefully evaluate all of the deals to avoid problems in the future period of loan. 

Reduce your Payment:

If you find that the amount of your monthly installment is more than you can afford to pay, you can decrease the amount of the installment by extending the term of the loan. The drawback will be that you will have to pay more interest. The benefit is that you will find it easy to manage a smaller amount of the installment.

Consolidate your Loans:

Consider consolidating your student loan with your other loans. Although you will not necessarily get lower interest rates but you will get the ease of one payment and some perks. 

Seek Help from Your Employer:

You can seek help from your employer to assist you in repaying your student loan. Some employers offer this perk to their employees.  If the employee shows exceptional performance, the employer might want to help assist the employee in paying off a student loan.

Contact the Office of Personnel Management:

Graduates, who are working in government agencies, can contact the Office of Personnel Management (OPM). The government can pay off a portion of your student loan.

Seek Hardship Status:

If you have a legitimate hardship status, the repayment of your student loan can be differed. One example of legitimate hardship is lengthy medical illness. Your student loan can be cancelled if you are suffering from lengthy medical illness. And it is not possible for you to be able to repay your loan. Extended period of unemployment is also a legitimate reason for being awarded Hardship Status.

Contact the Department of Education:

If you cannot find a job and the loan becomes due, you should contact the Department of Education. You will be awarded a hardship status, due to extended unemployment. You can apply for postponement of repayment.

Contact a National Ombudsman:

If you feel that the terms of your student loan are unfair and inappropriate, you can contact a national ombudsman. The ombudsman can act as an mediator and help resolve your conflict with the loan provider.

Seek Grants:

Some institutes and organizations provide grants for paying off a student loan. For example if you join Teach for America or AmeriCorp, you can be eligible for such a grant. Teaching in a low income school can also make you eligible for being forgiven student loans.

Follow the above mentioned tips for repaying your student loan and you will be able to take control of the debt situation and devise a viable plan of repayment. Once you have worked out the best course of action for paying off a student loan, you can put your payment on autopilot and relax.