Stressing Over Student Debt? Read This For Relief.
While there are a variety of strategies regarding the best way to pay down different kinds of debt, the “debt snowball method” is one of the most popular avenues recommended by financial experts for paying off debt.
According to this approach, you simply pay off the accounts with the smallest balances first. While this may seem to run counter to common sense if you have larger debts with higher interest rates, the psychological benefits gained from making progress add up to peace of mind and forward momentum.
After all, while making payment after payment toward chipping away at a large balance may want to make you throw your hands up and give in, there’s great satisfaction to be found in paying even a small debt down to zero and crossing it off your list.
If you’re dealing with loan payments which have become unmanageable, several federal repayment programs exist aimed at offering relief, including graduated, extended, income-based, and pay-as-you-earn repayment plans.
One thing to keep in mind about these programs? You’ll still have to pay back your loans, which may end up costing you more over time due to the total interest paid. In the meantime, however, you’ll enjoy invaluable breathing room while you explore avenues for getting caught up.
Regardless of the repayment program you choose, one element is critical: keep your loan servicer in the loop. If you are in danger of falling behind on your payments or not making a payment at all, inform your lender immediately. Think of it this way: They don’t want you to default on your loans any more than you do.
All loans aren’t created equally. The more you know about your loans, the more you’ll ultimately understand about how to repay them.
In the U.S., for example, students have several handy options for tracking their loans. The National Student Loan Data System (NSLDS) maintains a convenient database of all federal student loans, while credit reports reflect all private loans. In order to make sure nothing falls through the cracks, maintain an updated list of all of your loans, lenders, balances and repayment statuses.