Managing Your Student Loan Debt

Nearly every college student takes out student loans during their undergraduate education. With tuition skyrocketing year after year, few have any other option in order to finance their education. Unfortunately, many students are not ready to face the growing debt that has ballooned during their time in school. The average student graduates with about $22,000 in student loan debt. This number doesn't even include the interest, which on unsubsidized and private loans has continued to grow month after month. Furthermore, students end up paying several thousand dollars more than they borrow due to the interest that builds up during their repayment period.

Feeling overwhelmed? Take a step back and relax. Whether you just started college or you're about to graduate, there's plenty of things to do to ensure that you manage your school loan debt properly. For starters, students just starting out in college should be sure to investigate every possible avenue for tuition funding. Sure, it's easy to head to the Sallie Mae website, fill out a form, click send and wait for a check. But you should first look into every possible scholarship, grant or work-study opportunity available to you. These are great sources of free financial aid which you don't have to repay after school. Look online for possible funding opportunities, and check with your school's financial aid department to see what scholarships and grants are available through your school.

If you're well into college, it's not too late. See if you can find any scholarships or grants as well. Also, try to work a part-time job if possible. It shouldn't interfere with your studies, but if you can sacrifice a few hours each week you should be able to pay off your student loan interest for that month. It may seem insignificant now, but if you ignore that growing interest amount, you'll have an extra thousand dollars or so which you'll end up having to pay off later on.

Every student should start exploring their repayment options as soon as they approach graduation. Federal loans offer several options for repayment, including an option to have monthly repayment amounts based on your income. That means that your loan repayment amounts will be capped according to how much money you make. Each time your income increases, the repayment amount will increase as well. This helps to keep repayment amounts manageable for most graduates. If you can pay more, always do so since it shortens the amount of time you will have to make repayments.

If you're having serious trouble making your monthly repayments, forbearance or deferment are two last-resort options. These should only be used for dire circumstances since, in many cases, your interest continues to grow under these terms. Another way to make loan payments manageable is through consolidation. Only private loans can be consolidated, which helps to lock in a low interest rate for your repayment amount. Also, it can offer additional repayment options for graduates who are struggling to make their monthly payments.