Understand the Types of Student Loans in the U.S. and Their Pros and Cons (2)
If you want to repay your loan as soon as possible, another way is to pay more than the minimum repayment amount each time. However, it is worth noting that you must first understand how your excess repayment amount is calculated to the existing loan balance. Every lending unit has different calculation methods, but in most cases, the excess repayment amount will be used to pay interest instead of the loan principal. Therefore, according to your own repayment method, it is very important to communicate clearly with the lender as much as possible.
If you designate your excess repayment amount to be used first to repay the loan with the highest interest rate, you may save hundreds or more in interest repayment. As a result, the loan can be paid off more quickly. Sometimes, if your excess repayment may cause the lending unit to advance the next payment time. In short, we must ensure the monthly repayment on time, otherwise the extra repayment amount will not bring you too much benefit.
If you want to pay additional arrears, you may need to consider saving other expenses. Everyone should check their various expenses. In addition to fixed expenses (such as mortgage, utility bills, car loans, etc.), how much will they have left at the end of the month? Can I bear the excess repayment amount? Is there any place to save money? (For example, reduce the frequency of eating out) Help yourself to make a budget, and then be sure to implement it accordingly. These are more effective ways to help you save money and repay your student loan as soon as possible.
According to the studentaid.ed.gov website, under certain conditions, you can apply for a deferred repayment plan, which can temporarily postpone or reduce the repayment amount. Delaying or reducing the repayment amount can help you avoid defaulting on debt.
Your loan service provider may provide a grace period when the repayment cannot be paid and the application for a repayment stay is not met. When a grace period is allowed, the repayment payment can be suspended or reduced for up to 12 months. But for subsidized and non-subsidized loans (including all PLUS loans), the interest during the grace period will still be calculated.
There are two types of grace periods
Free decision-the lending unit depends on the situation
Compulsory-under certain conditions, the mortgage unit must give
Arrangement is the key! Sort out all important loan information so that you can have a better loan repayment plan.
In addition, you can consider automatic transfer repayment, which can help avoid late or missed payments. Moreover, many lenders have lowered interest rates because of the use of automatic transfers for repayment.
Debt Snowball refers to paying off small loans first, and then paying off large loans step by step, or from large to small. Debt Avalanche refers to the priority repayment of debt with high interest rates.
Perhaps consider paying off private sector loans first, because these loans have higher interest rates than federal loans, and the repayment methods are less flexible.
Use the online tools of the loan service provider to help estimate the repayment time and the impact of various repayment methods.
For private sector loans, another option for borrowers is to refinance. If your current private sector loan interest rate is very high, then refinancing may bring a lower interest rate, thereby reducing your total repayment.
If an accident happens to you, is your family able to help you repay your loan? Consider life insurance.
Federal student loan balances will be cancelled due to the death of the lender. However, private sector loans generally do not have this practice, so the co-insurer of the loan, or the estate of the deceased lender, or the spouse will be required to repay.
Life insurance can provide corresponding protection to help them continue to repay their debts.