• Get organized. With most college graduates carrying up to 12 student loans with their diploma, it’s very important to compile a list of everything you owe, who you owe it too, when it’s due and all the identifying information for each and every loan. Add a reminder to your calendar when every payment is due, since you are required to make payments even if you do not receive a coupon book or a statement from your lenders. Also, check out this student loan checklist to help keep you organized.
• Make the first payment. With the number of loans most students carry coupled with the six-month deferment, if a loan payment is going to be missed, it will be the first one.
• And then make it automatic. Automatic loan payments are a smart bet for two big reasons: they get it done and they often come with the added incentive of a .25% or .50% interest rate deduction.
• Consider consolidation carefully. This is more than just making one or two larger payments a month. Identify which loans are federal and which ones are private, and the loan rates for each. Federal loans can be consolidated, but offer no incentive to do so; private loans can be consolidated, but sometimes at the expense of a higher interest rate. A loan specialist will be able to help you identify your options.
• Claim the student loan interest deduction. Just like it’s easy to miss that first loan payment, it’s also easy to miss the student loan interest deduction, which can be worth up to $2,500 per year on both private and federal loans. This above-the-line deduction is an important one, so build that reminder into your calendar, too.
• Keep your lender in the loop. If you lose your job or your ability to pay (or both), have a conversation with your lender as soon as you can. Federal student loans offer temporary suspensions for short-term financial difficulty (think job loss or maternity leave). Keep in mind, however, that interest continues to accrue in that situation, so you may need to consider an alternate repayment plan that will give you a lower monthly payment, but a stretched out term.
• Don’t not pay. Not paying your student loans is not an option. There’s no getting away from them. Even if you declare bankruptcy, private and federal student loans are almost impossible to discharge.
At Busey, our team of professionals can help you plan—no matter your stage in life. Visit any Busey location or call 1.800.67Busey.