You minimized your debt before starting your studies. You had a solid budget in place while you attended school. Now it’s time to start repaying your student loans. Utilizing the list, spreadsheet or app you used to track what you owe and to whom, start figuring out what to pay off first. Financial experts like Dave Ramsey recommend starting with either the smallest interest rate or the smallest amount first. Once you’ve determined the order in which you’ll pay your debts, keeping these seven tips in mind will help you become debt free as quickly as possible.
1. Identify your payment options
Review all of the terms and agreements for each amount you owe. Postponing payments may be an option, opting for a service commitment to pay off student loans completely may be another one. Be sure to take a look at interest, fees and payment penalties before deciding on a course of action. Of course as you secure employment, go back to school and experience life, circumstances may change so you may need to reconsider your options later on. Keep all of the research that you do in this early repayment stage organized so you’ll have it to reference should the need arise.
2. Meet with a financial advisor
A financial advisor, also sometimes called a financial planner, works with clients to help them achieve financial goals. If your student loans are making you feel nervous, let one of these professionals guide you to financial security. They can make recommendations and give great advice not only for student loans, but for other financial decisions, too, like purchasing a home, saving for retirement or saving for your children’s educations.
3. Apply for loan forgiveness scholarships
Scholarships can help you reserve money to spend strictly on your student loan repayments. There are an endless number of scholarships you can apply for during your time in college. Keep in mind, the money is not just given out, you will have to do some work in order to receive a scholarship. You may need to fill out a detailed application or write an essay in order to be considered. The hours you put into those tasks will be well worth the money you could be receiving. Filter our Funding Opportunities database to discover the loan forgiveness scholarships that are available to you.
4. Pay more than the minimum payment
If you have the ability to, it might be worth it to pay more than the minimum for on your monthly payments. You are probably thinking, “how does spending more, save me more money?” but what you need to consider is your loan interest. Depending on the loan taken out, you could be paying anywhere 4.5% and 7%. Interest rates are calculated as a percentage of the unpaid principal of the loan, meaning it factors into the final payment. So the quicker you pay off your loan, the less interest you will owe overall.
5. Look into companies that will help pay for college
A surefire way to reduce loan payments is to have no payments at all. We touched before on Tuition Assistance Programs that have companies pay for you to take classes. If you are working and earning your degree part-time, your job can take care of courses that are directly focused on your health care career or are required in order to receive your degree. If you are unsure if your job offers this assistance, contact your HR department for more information.
6. Consider the military
Joining the armed forces can create a new path for your health care career as well as provide valuable life and professional experience. Members of the military are able to qualify for loan postponement and loan forgiveness, depending on if you meet all the necessary qualifications. The Department of Education’s Student Aid website highlights the federal student loan benefits offered to members of the U.S. Armed Forces.
7. Check all available resources
Places like the Financial Aid Office at your school can help you put together your repayment plan. Also consider talking to recent graduates who have already made a plan and take pointers from them. The Department of Education’s Student Aid website has calculators and repayment estimates to help you understand your options as well.
Paul S. Garrard, American Dental Education Association Financial Aid Consultant and a 32-year veteran of student financial aid and higher education, contributed to a previous edition of this article.