Student loan debt is now the second-highest consumer debt category. just because student loans are common doesn’t mean they’re easy to navigate.
Student loans — private or federal — are a common part of the equation for many students’ college payment plans.
- College Debt Statistics
Student loan debt in the United States totals $1.71 trillion as 43.2 million students are in debt by an average of $39,351 each. Student debt is growing 6 times faster than the nation’s economy. 3.2 million new student borrowers and a spike in unemployment fueled the largest increase in the total student loan debt balance since 2013.
The nationwide total student loan debt balance increased 8.28% in 2020.
The average student loan debt, meanwhile, increased 4.5%. In May of 2020, 9% of borrowers who attended public institutions were behind on their student loan payment
Fortunately, more than 35 million of these borrowers may qualify for student debt relief under the CARES Act of 2020. Between the second and third financial quarter of 2020, the CARES Act offered student loan debt relief that affected a minimum of 20 million borrowers.
- What To Know Before Accepting Student Loans
There are a lot of steps, a lot of numbers and a lot of choices to make that can affect your financial future. Here are a few key things many students wish they knew before they borrowed student loans.
Don’t borrow more than you need
Borrowed money is not free money as you will have to pay it back so only borrow the amount you need.
Don’t be late
A missed payment is a missed payment, no matter how small or how quickly it’s fixed. Your lender could call your cosigner and cause drama you can avoid simply by calling your lender before hand to discuss your options before the due date.
Do your research on loan forgiveness
Some programs will forgive your student loan balance after you make a certain number of payments such as the federal Public Service Loan Forgiveness. If you’re planning on taking advantage of loan forgiveness, research all the terms and recent changes to ensure you remain eligible.
Beware of Predatory Consolidation Services
Consolidation your loans might seem like an amazing deal only to turn into your worst nightmare. Beware of deals that sound too good to be true as they usually are.
Understand the consequences
Have a backup plan if your job search ends up taking longer than expected. If your financial situation after graduation isn’t quite what you thought, you can consider changing your repayment plan on federal loans or see what options are available for private loans.
How To Pay Off Your Student Loans Fast
The good news is that there are many ways to pay off your student loans faster.
Refinance your student loan
Refinancing will help you save on interest but you need a good credit score and a steady job to be considered as a good candidate. Although this strategy will help pay off your student loan fast without making extra payments, you shouldn’t do it if you are planning to apply for Public Service Loan Forgiveness.
Pay more than the minimum
If you pay more than minimum each month, the more you pay the less interest you’ll owe and the quicker the loan will go away. If this strategy seems hard, trick yourself into paying extra on debt by paying half of your payment every two weeks instead of making one full payment monthly and you’ll end up making an extra payment each year.
In. order to pay more than your minimal payment, you need money so the sooner you learn to save, the better. Look for affordable electric suppliers, limit your subscriptions, cook most of your meals at home and just look for free fun activities to spend only on your needs that need to be separated from your wants.
The consequences of student loans may seem scary, but as you fully understand what you’re signing up for, you’ll be fine. Students who get off track with their loan repayments are usually the ones who didn’t think it through. do not forget to read TODAY NEWS to keep yourself updated.