As fall approaches, the grace period is ending for many student loans. Most graduates will have multiple student loans, at least one per year. So how do you prioritize? Here are some suggestions we think will help:
Organization always helps to prioritize loans. The ionManage module with iontuition will let you see your loan details including amount owed, servicer, and interest. That way you can find which loans to pay off first, and take advantage of the loan repayment calculator and other online tools.
Pay the private loans first
Private student loans will generally have a higher interest rate and be much less flexible with repayment plans. The sooner they are paid off, the less money it will cost you in the long run. Focus your resources and any extra money you can on these.
Federal student loans can have different interest rates, depending on when they were disbursed. Always prioritize the loans with the higher interest rate. Paying those off sooner will reduce the amount of interest that’s added to the cost of the loan.
Go big or small
You can focus on paying off the smaller loans first. Pay the minimum on the larger loans, but put money toward paying off the small loans. They’ll get paid off quick and give a pretty good sense of accomplishment. Or, you can focus on the bigger loans. Even with putting more resources toward paying them off, it’ll take a while. But, with each payment beyond the minimum, the larger loans will start costing you less in interest, saving money in the long run. It’s up to you which to do.
Keep it up
As you pay off each loan, keep the amount of money budgeted at the same level. Just redirect where that payment goes. A consistent amount is easier to budget with and it will bring down the loans like a steamroller.
Always pay the minimum
Even if you do give priority to paying off one loan over another, pay at least the minimum on all loans. Otherwise, it can affect your credit score and get the loan considered delinquent, even if you’re paying down other loans.
When you get extra
As you get raises or bonuses, considering applying them to your payments. If you got along before you received that extra money, you can use it on loan payments without even feeling the pinch. Make adjustments to your budget as you need, but whenever you can increase your payments without any problems, do it.
However you prioritize, keep focused on the goal of paying down your debt. Keep records and a budget. Once you get in the habit, paying your student loans becomes almost easy.
Tom Wray is all about the research, getting it right, and making it relevant. He’s got solid journalistic experience in all forms of content delivery – and he’s got his keyboard humming with what’s up and important for students, college admins, parents, employers and news junkies. Check out his weekly columns: Student Loans 101, News Flash!, Eye On School Success, Eye On Student Success and more.