Education loan

Start Student Loan Repayment Off Right From the First Payment

For many recent college graduates, 2014 has been a year of firsts, including their first full-time job, their first time completely living on their own, their first time filing their own taxes and their first student loan payment.A lot of student loan borrowers find that first bill too overwhelming and put it aside to deal with later, thinking that if it’s a week or two late, it's no big deal. But this is totally the wrong mindset. Some might argue that your first student loan payment is the most important one of all.

Based on the borrowers we tracked who defaulted within 20 years of starting repayment, close to a quarter of them never made their first payment.Part of the reason for this is that once borrowers miss their first payment, they begin to receive delinquency notices, and the anxiety gets even more overpowering.

Make it a habit: Of the borrowers we track, those who make their first 24 payments on time usually avoid default, likely because these consumers have created a habit of making their student loan payments.The habit premise is so well-known that some lenders will offer incentives to keep you on track. For instance, some will reduce your interest rate if you make your first two or three years of payments on time. If you miss that first payment, though, that potential benefit is gone forever.

Create a budget: Being ready for that first Education loan payment is probably also the result of making a budget – something most financially successful people do on a regular basis. Hopefully, you knew about your student loan payment amount over the summer and sat down to fit it into you budget.Look at that projected payment and determine whether it is affordable with your current income and living expenses. If it isn’t, see if you could cut some expenses. If you can’t, apply for a lower payment option.

Get ahead of your payments: If you want to really get ahead, start making your monthly payments before the first payment is due. Unless you were among the lucky students who were able to pay for school using only subsidized Stafford or Perkins loans, interest has been accruing since the day of disbursement.Source: http://bit.ly/1VTxcEl

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