The cost of tuition is rising by the day; although there is a common saying that you cannot put a price on a good education, student loans are on the rise. It is important to come up with a practical repayment plan and financial aid should be offered also. College loans are good because you are not limited to what you can study, buy thesis, or where but remember unpaid college loans cause a delay in life priorities such as buying a car, starting a family or even buying a house. When you have college loans hanging on your neck you have tighter finances to budget for, which means you have to pay off the loans within a realistic time frame.
- Create a 3-year repayment plan
Naturally, when humans are put under some kind of pressure to perform better; this should work for you on student loan repayment also. When you set a repayment plan with an end date in sight you will be committed to repaying it. Combine your salary and establish an amount that you can set aside to ensure that you repay the loan by the end of 3 years. This will give you time to adjust the amount of the loan to ensure that you meet your day to day needs as well as repay the loan. The money budgeted for should go towards minimizing the principal balance and in case the three years are too short you can extend the time to five years.
- Create a repayment fund
This is a bold step because you need to open an account which you can faithfully commit to depositing money which cannot be easily withdrawn. One can approach the bank and have them automatically move money into a savings account, this is effective and it forces you to set aside the money. The money should then go directly to paying your college debt and not any other project you might have. Compare different savings accounts and pick the one that yields higher interests as you wait to pay off your college debt.
- You should see the loan like a mortgage
If you feel that you are financially able to make larger payments towards the principal amount go for it. The secret is to cut down the principal amount and automatically the duration for repayment is cut short and the interest accrued is minimized. You can add the amount set, for repayment or add the number of times you will be paying the loan such as paying every two weeks. This way you pay the debt fast and soon you can focus on other investments such as the purchase of a car or a house.
- Generate money while still in college
There are several ways which you can generate money to start offsetting your college loan early. One of the ways and the easiest way is getting a part-time job from which you can save and start repaying off the loan debt while you are still in college.
- Avoid the usual misappropriation of money traps
At this age, everything is almost instant. Immediately after college people think that life becomes good from when you earn your first check. If you want a fulfilled life you need to live within your means by making sacrifices. One of the ways to make sure you do this is by planning ahead of time and focus on your needs rather than your wants. People who have successfully paid their college debt lived within their means and it requires discipline, especially in budgeting and sticking to the budget.
Before taking that college loan, there are options you should explore such as your loan should be less than your first year’s salary. Find scholarships, become a thesis helper or grants which are considered free money. Try borrowing federal loans before going for private loans.