Friday, May 27, 2016

Why Is It Important To Pay Off Your Student Loans

The government has been stuck with a lot of defaulted loans the past few decades. They are getting a little more serious in their attempts to have them paid back.  They can take your income tax refund or garnish your wages if you do not pay back your student loans.  The government and the loan companies are taking this non-payment so serious that they are actually seizing property in some cases to force the payment.  You do not want to be in circumstance.  Even if you are still in school, start paying back a little portion of the loan and try not to take anymore out.  Try for scholarships or grants. Find employment that will pay part or all of your tuition.  The spiraling amount of interest added to your loans will be a burden to pay and that is not even counting the principle.

A strategy to start paying off your student loans while you are in school is to pay off the smallest amount loan first.  You may have five or more loans out there, so the student loan with the fastest payoff will bring down the number of loans. Also pay off the non-subsidized loans first. Subsidized means that the interest is paid by the government and non-subsidized means that you owe the interest.  The make it clearer, pay off the lowest non-subsidized and continue to payoff non-subsidized loans until they are clear. Then you need to pay off the lowest subsidized loan and continue from there. You will be amazed at how your monthly contribution will lower your balance and raise your credit ratings.  Using this strategy you can use your college degree to find a good job and have a higher quality of life instead of spending the first decade of your scholarly freedom to pay student loans. If you go to graduate school or pursue your doctorate, you student loans could be as much as $200,000.00.  This amount of money would keep you paying bills for ten to thirty years of your life.

Pay them now and live better later. 

If you are having trouble paying your student loans you might want to think of applying for a deferment. A deferment gives you time to get your finances together so you can begin to pay your student loans back again. One way you can apply for a deferment is if you have financial hardship. This means you have lost a major source of income due to illness or losing your job. You might have taken on the extra responsibilities of taking on a dependent or you might have had a baby. With the financial hardship clause you can have six months to a year deferment applied and you can restructure your life so that student loans will not take away from your quality of life. If you are in the military and you get deployed over seas, your student loans will be put on hiatus until your unit comes back stateside.

You will be able to serve your country and your student loans will be fine. You will still accrue interest on non-subsidized loans but your subsidized loans will be waiting for you when you come back stateside. You can check with your financial officer on your base for more details. If you are in the National Guard the same policy applies to you. Whether you are in the reserves or active duty, you have to apply for it. It does not automatically happen. Another way to avoid payment for a time is to enroll back in school. If your employer pays for your classes or you have a grant or scholarship, enroll in classes for at least six credits a semester and you will be able to have your student loans deferred for as long as you are in school. It is better to pay off your loans as fast as you can, but if life gets in the way, deferment is the best option. When you get your ducks in a row, you can pay back those loans and get on with life. You don’t want to spend the decades of your twenties and thirties paying back what you spent in four years.