Student debt can be overwhelming to deal with. According to the Congressional Research Service, the total student debt in the US comes up to $1.6 trillion, second to the size of the national mortgage debt.
Student loan debt isn’t just a problem—it’s a crisis. But there’s a good side to this. Economists call student loans “good debt,’’ because they provide educational opportunities that otherwise might not be affordable.
As you may feel burdened with what to do with student debt in Chatsworth, it can be tempting to focus your financial resources and energy to pay them off as soon as possible. However, some financial experts believe that it’s not as bad as it seems.
Here are a few tips on how to pay for student debt in Chatsworth.
Calculate your total debt
Similar to other types of debt situations, you must first understand the overall amount that you owe. Students usually graduate with numerous loans, both federally sponsored and private, having arranged for new financing each year they were in school. So, take the time to do the math before developing a plan to pay it down, consolidate it, or possibly explore forgiveness.
Know the terms
While you sum up the size of your debt, also itemize the terms of each loan by knowing each loan’s repayment rules and interest rates. You’ll need this info to develop a payback plan that avoids extra interest, fees, and penalties.
Review grace periods
As you pull together the specifics, you will notice that each loan has a grace period. This is the amount of time you have after graduation before you have to start paying your loans back, which differ depending on the loan.
Make a list of your important goals
Student loan debt may seem like a great burden, but it doesn’t have to be what prevents you from reaching meaningful life goals. Regardless of how tight your budget is, it is important to have a written financial plan to provide guidance when prioritizing where to allocate your time and financial resources.
Create and follow a personal spending plan
This one sounds like a no-brainer, but how many of you really follow a budget and track expenses on a regular basis? If you have struggled with maintaining a spending plan, you may need to change things around and find a different system that you are most likely to follow.
Hit higher loans first and pay down principal
As with any debt-payoff strategy, it is always best to pay off the loans with the highest interest rates first. One common method you can turn to is to budget a certain amount above the total monthly required payments, then allocate the payment to the debt with the biggest interest bite.
Another common strategy is to pay extra principal whenever you can. The faster you reduce the principal, the less interest you pay over the life of the loan.
Explore alternative payment plans
If you have a federal student loan, you may be able to call your loan servicer and work out an alternative repayment plan. Refinancing with a private lender is another option to consider that could potentially reduce your overall interest payments. However, be sure to factor in that you will be giving up benefits like income-based repayment plans or even loan forgiveness if you work in certain public service jobs.
Talk to us today to learn more
If you find yourself in a bad spot, consider contacting the U.S. Department of Education for help or to speak with a debt lawyer in Chatsworth.
To avoid the worst case scenario, you might want to avail of services from a bankruptcy lawyer in Los Angeles.
Attorney R. Grace Rodriguez is a California State Bar Bankruptcy Specialist, which helps her entire team custom tailor solutions to fit each client’s needs. We will stand by you throughout the legal process and beyond to ensure your best possible future.
We have the knowledge and experience to help with both bankruptcy and non-bankruptcy relief options. Our attorneys will meet with you to help you really understand what a bankruptcy entails and how it can benefit you or hurt you.
To speak to a lawyer about your debt relief options, contact our firm at 818-734-7223 or send a message online using the secure form on this website.