Repaying Student Loans

Repaying student loans is a necessity if borrowers want to be responsible and maintain good credit ratings. It is wise for students to make the most of their repayment schedule and to set up a budget to help plan. Repaying a student loan can be a positive experience if the individuals are organized about how they will do it. Of course, the first step is to generate income by having a job. However, making a plan to repay is something that can be considered well before graduation. In fact, if it is possible, borrowers are encouraged to start making payments before they are charged much interest.

Some may think that making payments before graduation is a silly idea, but the agreement is that there are no interest charges as long as the borrower is in school. Therefore, if the student can make just small payments toward repaying student loans, he or she will be making significant long-term progress toward the overall amount that needs to be repaid. Another option is to put some money away each month in a high-interest savings account or certificate of deposit (CD). This way, the saver will be gaining interest on the money, but could still access it if an emergency arises. When the time is right, the entire account can be closed, the monies withdrawn, and the whole amount can be put toward repaying a student loan. Seeing a big chunk immediately applied toward the balance can be extremely motivating.

When weighing options for repayment, it is important for students to consider what the likely salary range is for the first job they will get after graduation. It is important to be realistic. If the goal, for example, is a teaching job with a salary in the $25,000 to $35,000 range, then the amount paid toward debt will not likely be high. However, graduates can make short-term and long-term plans to help them stay on track and eventually pay off the debt. Repaying student loans should be a priority, as with any debt that is incurred.

If the borrower is ever in financial strife (if an emergency arises or a period of unemployment occurs), he or she can always ask for deferment from repaying a student loan. This means that payments will not need to be made for a certain agreed-upon amount of time, such a three to six months or even twelve months. However, the interest will still accrue, so deferment ought to be a last option. If students have more than one account, consolidation should be considered as a viable option to decrease monthly payment amounts and save on interest charges.

It is important to have a mindset that repaying a student loan is really investing in the future. Without the loan, there would be no degree and thus, the future would be bleak. This will help keep a positive attitude about repaying student loans. People who are having trouble budgeting money to repay their loans should seek wise counsel in the matter. "Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal," (Matthew 6:19-20).

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