College may be a worthwhile experience, but the debt incurred can be crippling. Students coming out of undergraduate schools might have upwards of $30,000 in college loans to pay back, while those who are leaving graduate programs are likely looking at even more. Whether you're a new grad or have been working on paying off college loans for years, it's time to get serious about reducing the debt.
Deferment and Forbearance
If you are currently unemployed or meet other specific criteria, such as being in school or participating in a program that will give you loan forgiveness, it's usually possible to get a deferment or forbearance. In a deferment, you don't have to make payments, and interest does not accrue. In forbearance, you also don't have to make payments, but interest does continue to accrue.
These options are great for those times when you can't make any payment at all, but it does mean that you're not paying down those debts. If you can afford to make even the smallest payment, it can be smart to make those payments, saving deferment or forbearance for times when you really need it.
Making Payments Easy
If paying off your college loans is your goal, you simply have to bite the bullet and make those payments. Setting up automatic payments with the loan provider is an easy way to get the job done. You won't have to think about it, and won't forget to send the check or have to make late payments. Choose a time of the month when you're sure to have some money in your account. For example, if you get paid twice a month, but money's tight at the beginning of the month when you pay rent, ask the lender to withdraw the money on the 15th. Most lenders are willing to give you a little wiggle room with due dates.
Finding Extra Money
Making your payments on time is a good first step, but paying only the minimum amount due means that you won't pay it off quickly. If you can afford to, add an extra $50 or $100 to each payment, and specify that this money should go toward the principle. When you get larger amounts of money, such as a bonus at work or your tax refund, take a chunk of that money and apply it to your loan. These bigger payments will really chip at the loan and you'll pay it off much faster. You could also look at your budget to find places where you could save some money and then apply your savings to the loan.
Consistent on-time payments will not only reduce your debt; they'll also improve your credit score. It's well worth the effort to focus your attention on paying off your college loans.
