So you’ve gotten your fancy degree and now reality is finally setting in, and it’s time to pay back those student loans. You realize you never took a look at just how much debt you collected overtime from your student loans, and it’s finally sinking in—how will I pay for this?! Paying back student loans can take months, years, even decades—and sometimes it feels like an entire lifetime of recurring payments.
As the number of students acquiring debt increases, student loan borrowers are struggling to keep up with those increases. Here are four common reasons you may be having a hard time with your student loans:
- You don’t understand what interest rate means
Interest rate can be foreign to anyone who is unfamiliar with it. Understanding that each loan borrowed has some type of interest rate attached to it can hinder you if you don’t know what you’re getting yourself into. Making sure you are aware of what interest rate is and how much applies to the borrowed loan, as well as what it means long-term for you as a borrower is extremely important to know. Establishing what interest rate is in correlation to paying back your student loan is key.
- You haven’t secured a full-time job opportunity
So you’ve borrowed your student loans for the duration of your college career, and now graduation is around the corner, but you still haven’t secured that full-time job offer. Most loan distributors give students a six-year grace period before beginning to collect repayments. This can be used to your advantage, because if you have not secured a full-time job opportunity upon graduation, your loan repayments won’t immediately kick in. Use this grace period to your advantage to explore full-time job opportunities before having to repay those student loans.
- You have a rising student loan balance
Your student loan balances have drastically increased year after year. If you’re a recent college graduate, you may have borrowed large amounts of money that resulted in having to repay back so much more than you anticipated. Many recent graduates struggles to begin their careers and get on their feet because of this rising student loan balance. Student loan repayments take up a significant portion of entry-level salaries, which causes many to struggle with basic necessities.
- Long repayment terms
It can feel like it’s nearly impossible to catch up on repayments of student loans when the repayment terms are 5+ years. Due to student loan payments being extremely high, graduates tend to take longer to pay back their loans. With things such as IDR plans, the government tends to extend payment terms from 10 to 20 years and sometimes even 25. Although this is beneficial for repayment, interest rates are skyrocketed, and in the end—you still end up paying more.
So how can you make sure you stay on top of recurring student loan payments? Talk with your student loaner and configure the best solution and routine to incorporate into repaying your loans.