Over 40 million Americans utilize student loans. Across the country that adds up to be over 7 billion dollars in national debt, second only to mortgages. Take another look into your finances with these student loan tips courtesy of Heartland Bank!
- Choose your loans wisely: Calculate the cost of the necessities – tuition, room and board, textbooks, and transportation – and sign loans that cover only what you need, even if you qualify for more. A part-time job or summer position can provide funds for added nonessential expenses. Your loan might allow you to defer interest payments while you’re still in school. However, unless it’s subsidized, it will accrue interest immediately. Unpaid interest then compounds and adds to the principal, creating an even larger amount to repay.
- Increase your payments: If you’re on a 10-year installment plan, you’re paying a decade of interest on top of your original loan, adding more debt to your plate. When possible, pay back more than the minimum agreement each month and chop off extra time and interest. If you have multiple loans, direct your additional payments towards the loan with the highest interest rate. The faster you can pare down the principal, the less you accrue in exorbitant interest.
- Make installments as often as you are able: With less time between payments for interest to accumulate, an accelerated payment plan can decrease your repayment term. By doubling your schedule of installments and making more payments over the same time period, you’re able to lessen the interest and pay your loan off sooner.
- Track your interest: Motivate yourself with a continually updated track record of your current interest. The longer you have the loan, the more money you spend towards interest. Incentivize yourself by creating a cap for how much you want to pay in interest per year. Let that help guide you to make extra payments per year.
Use our handy Online Banking to automate payments and ensure your installments are sent when you need them. If you’re curious how much you can afford to spend on education stop by Sunset Bank & Savings today, we’ll look at your finances and help you decide.