If you want to receive a higher education, applying for a student loan may be your only alternative. Depending on the cost of tuition at your school and other expenses, such as room and board, a college education can cost as much as $20,000 per year. Fortunately, federal loans offered by the government are available to just about everyone. These loans can pay your educational expenses and repayment doesn’t start until after you graduate.
Because you’re not required to make-in school payments when using a federal loan to pay for college, you could easily forget about the debt. Understand, however, that a federal loan isn’t free money. Some students make the mistake of not planning for repayment of student loans after graduation. As a result, they face payment shock, and because of their other expenses, there may be limited funds for student loan debt.
There are ways to avoid this situation. Here are three tips to help you plan for repayment of student loans after graduation.
1. Limit consumer debt while in school.
The less you owe after graduation, the easier it is to repay your student loan debt. For this matter, keep your finances as simple as possible. Getting a credit card while in college is an excellent way to build your personal credit history and score. Plus, a credit card can be useful in an emergency. If you decide to apply for credit, limit your number of accounts to one or two. Additionally, don’t accumulate high balances. Maxing out a handful of credit cards can trigger high minimum payments. And if this debt follows you after graduation, you may have little disposable income for repayment of student loans.
2. Keep expenses low after graduation.
Not only should you limit your consumer debt while in school, you should keep your finances simple after college. Understandably, landing your first real job is exciting. And after a few paychecks, you may get your own place or purchase a car. You worked hard in school, and there’s nothing wrong with rewarding yourself. But if you reward yourself too much, student loan repayment can become difficult.
Repayment on a federal student loan doesn’t start until six or nine months after graduation, depending on your type of loan. Rather than jump into a lot of new expenses immediately after school, wait until you know the amount of your student loan payment.
3. Look into loan forgiveness programs.
Depending on your occupation, you may qualify for government loan forgiveness programs. By means of these government programs, you can have a percentage or all of your student loan debt cancelled or forgiven. This can take the burden out of loan repayment. Requirements vary by program. For example, teachers may be eligible for student loan forgiveness if they work in a low-income area for a minimum of five years. Likewise, a doctor, lawyer or nurse may have a percentage of student loan debt forgiven if he volunteers or works in an area with a greater need for a certain number of years.