We discuss student debt on this site and structuring efficient repayment plans. But what if you didn’t finish?
According to the Federal Reserve report on economic well-being, those with student debt who don’t finish school are more likely to fall behind in their loan payments. USA Today recently reported on a number of steps to pay off your loan and avoid problems with your loan servicing company. Even if you did finish, these are excellent steps to save money and get out of debt.
- Don’t wait till the end of the grace period to start paying it back. Your loan is accruing interest and this means your loan balance is increasing while you wait! Pay as much as you can and this will go toward covering the interest cost. You can find out how much of your payments are attributed to interest. if you can pay more than the interest, that’s even better.
- If you’re leaving school without a degree, your income may be lower. If you can’t make the full payment, go to the loan servicing company web site and switch to an income based repayment program. There are numerous options for lower payments that can extend the term to 20 or 25 years or temporarily reduce the payment based on your income. You’ll want to adjust the loan payments upward as your income increases because these programs can be much more expensive. If your loans are private, you’ll need to contact the loan holder because they do not operate like the Federal loans.
- Focus on increasing your income. Find your strengths and develop your skills. Take online courses. There are numerous ways to increase your income producing capabilities and this should be a continuous focus for all of us. Look to community college and extension programs to take short courses. Most offer a wide range of classes that are usually low cost.
- Take on additional work. If you have a full time job, consider a side job. This alone might be the income source to cover your loan payments and then some.
Lastly, you might find yourself going back to school. If you do, the loan can go back into deferred status. If at all possible, keep making payments to reduce your balance and overall loan costs. If you remain committed to repayment and investments in self-development, you increase your chances of success.