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9 Ways to Managing Your Student Debt

With the increasing costs associated with attending college, more students are turning towards student loans. Financing college without borrowing any money can be a challenge today. Fortunately there are several ways in which students can keep their debt under control.

Apply for more scholarships and grants

Scholarships and grants do not need to be repaid. For students, the best thing to do would be to contact the financial aid office to ask for grants available, fill out the necessary forms and try to get as much grant as possible to reduce the need of depending entirely on student loans.

Understand your loan

Private loans today offer very low interest rates. However, some of them require students to start making payments as soon as the loan is taken. Federal student loans offer the lowest possible interest rates and have very flexible repayment options. Payments usually do not start until education is completed so they tend to be the better choice for students.

The grace period

For each loan, the grace period would be different so it is important to keep this in mind. For example, Perkins loans have a grace period of 9 months after graduation while Stafford loans have a grace period of 6 months. For private loans, the grace periods vary widely so contact the lender or check the paperwork to ensure you don’t miss the first payment.

Lower the interest rate

The interest rate on the loan will determine the amount to be paid in total. Rates may go down or up during the life of a loan and each lender will have different rules on which it will ultimately depend. If you have a lower interest rate, talk to the lender to lock it in when possible. All payments made will first go towards covering the interest and the fees of the loan and not the principal.

Lower the principal

Try to pay more than the minimum monthly payment required on the loan since it will allow you to lower the principal amount. This will ultimate reduce the interest that has to be paid on the loan. Send a letter along with the payment, asking the lender to apply the extra payment to the principal and not the future payments. Always keep copies of all extra payments sent to ensure they are correctly applied.

Expensive loans

If you have several different loans, consider paying extra towards the most expensive loan first. Private loans tend to have a higher interest rate so start with those loans. Paying them off ahead of schedule will allow you to save a considerable amount of money in interest.

Loan consolidation

If you have multiple loans that you’re struggling to manage and successfully pay each month, consider consolidating them into a single payment with a fixed rate of interest. There are several advantages and disadvantages of a loan consolidation so weigh them against each other carefully. Look for a fixed low interest rate and carefully read all the terms and conditions. Avoid consolidating federal loans in a private loan since you’ll then lose out on borrower benefits such as loan forgiveness and unemployment deferments.

Loan forgiveness

Several different programs will forgive part of or the entire federal student loan for those who work with certain employers or work in specific fields. Federal loan forgiveness programs are usually available for nurses, teachers, those working in public services, nonprofit or government organizations. Private, school and state loan forgiveness programs are also available.

Do not ignore the problem

If you are facing serious debt issues, do not ignore the problem. Stay in touch with the lender since they can work with you to help you find solutions to your problems. Serious debt problems can lead to several long term, severe consequences and it can also put your co-signer at risk. Consult a debt counselor if you cannot find a solution to your problem.

What Not to Do When Apply for Financial Aid and Scholarships

Applying for Financial Aid and scholarships can be tricky at times, and downright confusing. There are many lists on tips on how to successfully apply for such aid but there are even fewer lists on what NOT to do. So, the following is a list on what NOT to do:

DO NOT apply late

Applying late can drastically hurt your chances at obtaining a scholarship. Many schools have their own financial aid deadlines. The official application deadline for the Free Federal Application for Student Aid (FAFSA) is June 30th but students living in certain states have different deadlines to meet. Many other countries also have similar programs with similar deadlines.

What is worse is that if you are applying for a scholarship being late in your application indicates that you may not be hardworking or deserving of the scholarship. This is exactly the opposite of what you want them to think!

DO NOT forget to check all sources for a scholarship

Scholarships can come from many unlikely sources. Thoroughly check all of these sources. Many religious schools will offer ‘matching scholarships’ where the school will agree to match all funds donated by the student’s congregation. Unlikely scholarship sources also include banks. Also, many companies offer scholarships to the children of their employees. If you are a part of a minority or a disabled person there are scholarships available that can be used to your benefit.

DO NOT forget to check application for any potential errors

Nothing says “do not give me a scholarship or grant” like handing in an application with bunches of errors and mistakes. You want the scholarship committee to see the best side of you. You want them to see the polished, professional side of you.

Also, if you make a mistake on your financial aid application packet it could mean that you may miss out on money. It helps to have a family member or friend look over your application to see if there are any obvious mistakes being made. If you are dependent upon your parents for financial aid it is important to have your parents check to see if their section of the application is correctly filled out.

DO NOT forget to have the necessary paperwork available

Having the necessary paperwork available means that you can successfully avoid some of the common mistakes that people make. Applications like the FAFSA can be tricky and remembering the detailed numbers and codes can be a challenge. Having your paperwork organized, ready, and available will greatly reduce the stress associated with submitting the application.

DO NOT forget to be creative!

Okay, so it may be impossible to be creative when filling out the FAFSA but when it comes to individual merit or achievement based scholarships you can truly let your creativity shine through! Do not be afraid to talk about the strange and unusual experiences that you have dealt with in your life. No matter what the scholarship is for, the scholarship committee loves seeing things that prove that you are bright, witty, and creative. Everyone has some sort of quirk that helps them stand out from the crowd!

DO NOT be afraid

Applying for scholarships can be very daunting at times. It is important to remember that you are not the only one going through the scholarship and financial aid process. There are millions of students who have gone through this process unscathed. Chances are, you will do just fine and you will come out of it with great life experience even if you do not get any grants or scholarships.