Student loan borrowers have a lot to deal with. Avoiding sky-high interest payments should be at the top of that list.
Here’s how to make sure you’re not paying more in interest than you should be.
Currently, fewer than a quarter of student loan borrowers are repaying their principal, or what they originally took out, Education Secretary Betsy DeVos said at a recent conference on financial aid.
Instead, their monthly payments go toward interest accumulating on their debt, if they’re paying back anything at all.
This is dangerous. Bills can double, triple and even quadruple if left unchecked.
Interest on your debt grows while you’re in school and during the six-month grace period after graduation. Proactively paying at least the interest-only payments can keep your bill from growing.
If you can’t land a job out of school, you might be able to postpone your payments for up to three years with an income-driven repayment plan. One way to do that is through an “economic hardship deferment.”
If you can’t defer your loans, you can also put them into “forbearance,” but your debt will rise significantly. To avoid this, check if you’re eligible for a deferment or an income-driven repayment plan.
Consider setting up an automatic payment plan to make your payments more consistent. Failing to pay at all can make your bill skyrocket.
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