Going to college is a stressful yet exciting time. Between filling out FASFA’s, awaiting acceptance letters, and registering for classes there is a lot of important information that can be missed. Currently, the US is holding $1.4 trillion dollars in student debt and so if there is one crucial thing to pay extra attention to, it’s your student loan information. If you are one of the many students in America that will be taking out student loans to pay for college, here’s a few pitfalls to avoid so that you’ll be able to pay off those student loans without having to declare bankruptcy or suffer damage to your credit.
The best way to avoid massive student debt is not taking the loans in the first place. Make a college budget and make sure that you only take out the exact amount you need. While some students take out extra for living expenses, don’t do this unless you know that the interest won’t be higher than what you could get from a credit card or smaller private loan. Once you have found out an estimate of how much you need, consider using a repayment estimator from studentloans.gov or similar sites to find out how much you will pay back, down to the penny.
Once you have taken out student loans, there is a tendency to forget about them. After all, you don’t have to pay them back until 6-12 months after graduation, so it’s not a surprise that many students accept the loan money without any real plan to pay it back. Knowing your repayment options is crucial, and there are many of them, so get familiar with the difference between IBR, REPAYE, and Extended Graduate and know which one best applies to your financial situation.
With regards to repayment plans, there are options available for private loans as well as federal loans so don’t think there aren’t options for you there either. Once you have found a repayment plan that works well for you, you’ll have to recertify each year so make sure that you pay attention to that or you could see an enormous spike in your student loan repayment amount. Another way to stay on top of your student loan repayment is to set up automatic payments which will prevent you defaulting on your loan.