College Loans: Picking the Right Repayment Option for You

College Loans: Picking the Right Repayment Option for You

You’re a responsible young adult, enrolled in college to further your education and prepare for you future. But, as we all know, college tuition is a big expense – and that means like many students, you probably took out a college loan. In fact, the majority of college student are graduating with debt up to $35,000!

So, when it comes to paying back your student loans, make sure you do your homework and find the right repayment plan for you. Why? Because these loans are “non-dischargeable.” In other words, no matter what, you must pay off these loans, as they will follow you all of your life until you pay them off. And because there is no right or wrong answer when selecting your repayment plan, you need to ask yourself some important questions, like:

How quickly can you pay off your loans?

If you want to pay off your loans early, that means you need to pay more than the minimum. You’ll save on interest, but keep in mind – what are you future plans? You might need that extra money to pay for a move or a new car.

What’s your personal budget?

Creating a budget is important – each month, can you pay on time your rent, credit cards, utilities, and student loans? Make sure that your repayment plan fits in your budget so that you don’t miss any payments.

What’s your interest rate?

If you have a high interest rate – let’s say over 5%  – then you should make paying off the student loan a top priority. The higher the interest rate, the longer it can take to pay back your debt.

The key to success here is to do what you can afford so that you can pay your debts on time. This includes your student loans, credit cards, cellphone, utilities, and rent. And only by making on-time payments, can you build and improve your credit score.

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