TIPS FOR PRVIATE STUDENTS LOAN DEBT

Student Loan Debt

Student loan debt can be difficult to manage regardless if its federal student loan debt or private student loan debt, however private student loan debt often proves the most challenging because of the lack of repayment options and/or programs.Private student loans are much riskier. Private student loan debt is a problem for many college grads today.They’re just like credit cards. Even if they start at what seem like low rates, those rates can shoot up at any time, and the interest costs can quickly surpass whatever you borrowed to begin with. Also, they don’t have the borrower protections that come with federal loans. Here are some for private students loan.

Consolidate all your private loans (if possible)

Private student loan consolidation is very limited now. In fact most lenders are not doing private consolidation loans at all anymore. But if you can find a lender willing to consolidate your private student loans it may be a good deal. The consolidation will reset the term of the loan and this may reduce the monthly payment, which can be beneficial if you are having problems making your monthly payments (keep in mind however, this will increase the total interest paid over the lifetime of the loan). As the interest rates on private student loans are based on your credit score, you may be able to get a lower interest rate via a private consolidation loan if your credit score has improved since when you first obtained the loan.

Know Your Grace Period

Different loans have different grace periods. A grace period is how long you can wait after leaving school before you have to make your first payment. The grace periods for private student loans vary, so consult your paperwork or contact your lender to find out.  Don't miss your first payment.

Pick the Right Repayment Option

You need to analyze all your expenses and then select the payment option accordingly. Extending your repayment period beyond 10 years can lower your monthly payments, but you'll end up paying more interest over the life of the loan. One important option is the Income-Based Repayment program. It can cap your monthly payments at a reasonable percentage of your income each year, and forgive any debt remaining after 25 years of affordable payments.

Budget

To start, figure out your monthly income after taxes and any other deductions such as health insurance or retirement. This number is usually referred to as your “take-home” or net pay. Next, make a list of all expenses that you are required to pay, such as electricity, rent, your student loan payments, water, insurance, your car payment and gas, minimum credit card payments, and food. Make a second list of items that are not necessities, such as cell phone, cable, internet, additional loan payments,

and all entertainment expenses. On a second sheet of paper, subtract your first list of necessary expenses from your net income. Ideally, you should have some money left over. Budgeting plays a key role in paying off high interest debt. Cutting frivolous spending, and making tackling private student loan debt a serious priority can go a long way in student loan debt reduction. Many don’t like to budget but it’s the only way you can cut down your expenses and pay your debts. Consider making as many prepayments as you can to reduce the balance of your private student loans. Making the minimum monthly payments is great, but making more that just the minimum is even better.

Know your tax options

If you meet income requirements, you can deduct up to $2,500 per year in interest on any loans used for higher education. Most private student loan lenders should present you with the applicable tax documents by January 31st of any given year. If you have paid interest on your private student loans and have not received any tax documents from your lender, contact them.

Make your private student loan payments on time

It’s a must do thing. Failing to treat your private student loan payments with the same amount of attention as you would treat your credit card debt, could hurt your credit rating in the future. If you are having trouble making your student loan payments, you need to open the lines of communication with your lender. Some private student loan lenders may be willing to work with you.