Student Loans, Budgeting and Deferment
The easiest way to manage paying back student loans is to create a budget. Most lenders will have a repayment calculator on their Web site, enabling you to pick a repayment plan and enter your monthly income to help you create a budget. Prepayment, typically, is not penalized. This means if you happen into a large sum of extra money, you can put it toward paying off your student loans without worrying about charges against your account.
If you're having trouble creating a budget and sticking to it, you might also consider credit counseling. Counselors will help in assessing your budget and creating payment plans that will work for your income. They'll also have insight into different methods of consolidation that may be helpful.
Keep in mind that your student loans might carry the lowest interest rate of all your debts. This may tempt you to blow off repaying your student loans so you can attend to that high-interest credit card debt you've also accrued. But resist the temptation, you'll want to pay off your loans as quickly as possible; even a low interest rate will add up quickly on larger loans. Furthermore, you don't want to default on the loan by not making payments.
If you find yourself in a tight economic position, it's important to consider a deferment of your student loans immediately. Lenders have all the incentive to keep you paying off your loan and will work with you to ensure you don't default on your loan. Deferments are utilized while you're in school but can also be used in the case of unemployment or economic hardship. Contacting your lender before you miss a payment is crucial, and you may need to provide proof of your circumstance.
The other option is forbearance. If you don't qualify for deferment, you may have this option, which is a temporary suspension or reduction in payments. A forbearance will commonly be granted if the loan debt exceeds 20 percent of the borrower's gross income. If you're not eligible for either of these, all is not lost. You could be eligible for a loan forgiveness program.