College students return back to school this month and the costs add up when you factor in tuition, room and board, books and more.
It may be easy to cover the costs with a student loan and worry about it at a later date, but it's important for students to think long term. Student loan debt can be burdensome later in life.
Here, experts from Desert Schools Federal Credit Union offer tips for managing student loan debt pre- and post-graduation:
Identify what type of loan you have: Each type of loan -- federal or private -- has different repayment options and benefits, and it's important to know which category your loan falls under.
Prepare for the future: If you're in school or taking advantage of a grace or deferment period, take some time to speak with a representative from your loan institution to know when your payments will become due and what your estimated payment will be.
Evaluate repayment options: If you have a federal loan, your loan payments will automatically be based on a standard 10-year repayment plan. If that payment is too much for you to make each month, speak with your lender to change your repayment plan. Keep in mind that lowering your payment will extend your repayment term beyond 10 years, and interest will continue to accrue on the original amount over a longer period of time. If you enter the public or nonprofit sector for work, you may be eligible for loan forgiveness after 10 years of payments.
Pay additional when you can: If you can afford to pay more than your minimum monthly payment once in a while, it will help in reducing the amount of interest you'll pay over the life of the loan. When doing so, request that the lender apply the additional amount to the loan balance versus crediting the amount for a future payment.
Be smart when managing multiple loans: Be sure to pay special attention to your loans with the highest interest rates and work to pay them off first. Additionally, explore your options for loan consolidation. Always look for a low-interest rate, and as with any loan, pay attention to the length of the term.
