Successfully manage your student loans | Veridian

Student loan payments have become a regular part of life for so many people. In fact, about 46 million Americans have student loan debt, according to studentloanhero.com. If you’re one of them, you will need a plan to pay it down.

To get started, you should understand:

• How many loans you have.
• Each loan’s interest rate.
• The grand total you owe.

Once you know these facts, you can start to make your repayment plan.

What are the payment options?

Once you start paying back your loans, you should know about the different payment plan options. Some are:

• Standard: You pay the same amount each month throughout your repayment period.
• Graduated: You start with lower monthly payments that increase over the years.
• Income-driven: Factors like your debt-to-income ratio determine your monthly payment.

But first, you must know where you are in the loan process.

If you’re still in school, you may be able to estimate what your payments will be if you know roughly what your balance will be once you graduate. If you’ve graduated, you may have a six-month grace period before you start making payments, but you’ll need to check with your lender.

What is the difference between loan deferment and forbearance?

In some situations, you may be able to go into deferment or forbearance. These are similar but have different requirements and impacts on your principal balance.

Deferment is when your loan payments are paused and do not accrue interest. This usually happens while you are still in school or within your grace period after graduation when you are still looking for employment.

Forbearance, on the other hand, also allows you to pause your payments, but interest accrues during this time. The interest will then be added to your principal balance.

Payment and consolidation options

Once you have your payment plan ironed out, there are several tips that may help minimize the overall amount you pay throughout your repayment period:

1. Make principal-only payments when you can. This will reduce the amount of interest you pay throughout your repayment period. For example, during the COVID-19 pandemic and the student loan freeze, all payments were principal-only payments since interest was not being accrued.
2. Set up automatic payments. Your lender may offer interest rate discounts for this.
3. Pay off loans with higher interest first. This will reduce your monthly payment in the future.
4. When you pay off higher-interest loans, apply those payment amounts to other loans.
5. Combine your private and federal debt into a single loan with a lower interest rate and monthly payment. Look at the terms and interest rates to ensure you don’t extend your repayment period or pay more interest. If you consolidate, you may lose your right to loan deferment in the future.

There are many ways to manage your student loans. Successful repayment starts with a solid plan, and that starts with understanding your debt. Contact your loan provider to discuss your repayment options.

For more tips on creating a plan to pay down your debt or if you want to talk about your individual financial situation, fill out the form below.