The Obama Student Loan Forgiveness Program is an option that many former students are looking into.
Student loans are now a trillion-dollar issue in the United States. Don’t become a statistic!
Here are five pitfalls to avoid when faced with repayment of your student loans:
Pitfall 1. Waiting to repay
Certain types of student loans do not begin accruing interest until the day payments are set to begin. Typically this is at the end of a 6-month grace period following graduation.
Other loans (“unsubsidized” is the word you need to know) start accruing interest immediately after the funds are disbursed.
To avoid all of that interest build-up, if it’s where you can, start paying the monthly interest before you graduate. This can go a long way in getting you out of debt more quickly after you finish school.
2. Not paying at all
If there’s anything that will affect you more negatively than waiting to repay your student loans, it’s not paying at all.
Just like with any other type of debt, defaulting on payments only hurts you. It can take years to rebuild credit scores negatively impacted by late or non-payment of any type of debt.
Even if you think you might be eligible for Student Loan Forgiveness Obama, make your payments in the meantime. Your credit (and your future self!) will thank you.
3. Not paying extra
You might be surprised at how quickly you can get out of debt. Even the slightest bit of extra money tacked on to your monthly payment can make a huge difference.
By repaying your student loans in shorter period of time, you will ultimately save money. The shorter period of repayment time, the less interest you will owe. It’s simple math and lots of motivation!
4. Not knowing your options
By majoring in specific fields of study, you could qualify for certain types of loan forgiveness. Going to work for a particular type of government or non-profit agency could cancel your debt entirely.
A few of these fields include:
- Law Enforcement
- Social Work
If you don’t qualify for cancellation of your debt, there are other options you can consider.
Income-based repayment options can be a lifesaver and give you some breathing room if you are having trouble finding employment following graduation.
Graduated repayment plans are also available to keep your payments small and manageable and increasing every few years until you handle a larger payment.
Pitfall #5: Failing to understand student loans when they are made
Not knowing what you’re getting yourself into is perhaps the biggest pitfall to avoid. Student loans are not to be taken lightly.
Even with possibilities like the Obama Student Loan Forgiveness Program available, make sure you qualify for such programs before signing on the dotted line.
Student loans are not necessarily something to be afraid of. After all, your education is an investment in your future. Take the time to understand the choices you have and then get out there and discover your purpose!