How to Pay Off Your Student Loans: The Right Way, the Dangers to Avoid, and the Solution That Will Set You Free
Updated on April 11, 2019
Graduating from college can be one the proudest moments of your life. You invite all your family and friends to this hallmark event when you are relieved of the responsibilities of higher education. You are done putting up with the endless hours of studying at the library, done with the excessive digestion of caffeinated beverages to keep yourself awake, and DONE with your obsession over the five letters of the alphabet that have haunted you for the last four years.
The moment your name is called to walk the stage gives you the most nerve-racking sigh of relief. You remember walking slowly and confidently, and your palms being a little sweaty as you shook the hand of the Chancellor whose face you can’t recall. This was the most exciting, yet anti-climactic, fifteen seconds of your soon-to-be-over college life. Now that a little time has passed since then, it is a proud memory of a moment that still swells you with a sense of accomplishment.
You are now back in your parents’ house looking for a job while binging on Netflix in the background when you are hit with the sudden realization: You’re about to become a full-fledged adult with thousands of dollars in student debt (maybe even tens of thousands of dollars). After freaking out about it for a few minutes you decide to google “paying off your student debt” and eventually land on this article.
The first thing you need to do now is calm down… everything will be okay. We, the team here at StudentLoanify, are going to quickly walk you through reality of student debt and its consequences, and then show you your best options that you can gain control over it.
What dangers should I be aware of when dealing with student loan repayments?
Let’s be real—most of us went into college knowing that we were taking out loans, but not knowing what this actually meant. We weren’t even sure what we were going to major in, much less have a strategy for repaying our student loans after college was over. We were normal teenagers and saved the problem for the future version of ourselves to handle. This is now the present you, and this is what you need to know in a nutshell.
When you search “student loan repayment” on YouTube, you will notice some videos that boast titles similar to “How I paid off my $120,000 loan in 13 months”. While I do recommend that you check some of them out and use them as motivation to pay off your loan, I do have to warn you about obtaining false hope form these videos. The truth is that on average, a bachelor’s degree holder leaves school with $30k in student loans, which takes him or her a whopping 21 years to pay off. Don’t be fooled into thinking it’s easy and that you can put it off—you need to begin chipping away at it right now.
What does it mean to have college debt in the beginning of your professional career?
“Imagine starting a race, and then the guy with the starter pistol shoots you in the leg.” This is the way that Hasan Minhaj humorously describes the crippling effect of student loans on fresh college-grads. The Patriot Act episode goes on to spotlight the many ways that the borrowers have been failed by the current student loan services. “Loan Servicers collect your money, make sure you’re paying on time, and explain all of your repayment options, or at least that’s what they’re supposed to do,” jokes Hasan.
He then gives screen time to the California Attorney General who states that “Student Loan Services is at the core of the problem for so many of these students who find themselves delinquent or in default”. After, he brings up fact that the Consumer Financial Protection Bureau (CFPB) sued NAVIENT, a student loan service, for “failing borrowers at every stage of repayment”.
Although the Student Loan Service providers may be partially to blame for delinquencies and defaults, the consequences still fall on you as the borrower. Some consequences have been as extreme as sending U.S. Marshals to collect a man’s $1500 student loan at gunpoint. “I’m still shaken,” Aker, the borrower, said. “Why send seven guys with guns about a student loan?”
This is the worst case scenario. If you don’t pay your student loans, you probably won’t get arrested by U.S. Marshals but your credit score can take an ugly dip. In general, payment history accounts for 35% of your FICO score. Just one late payment can cause your credit score to drop. This may lead to trouble getting approved for subsequent loans, getting charged high interest rates, and finding it more difficult to obtain a job.
What are the first steps to getting out of student debt?
While our student loans may seem impossible to get out of, they’re actually extremely manageable to pay off—if done right. Here is how you begin in five easy steps:
- Know why you want to get out of debt
- Find out what loans you received and how much you owe
- Determine the best repayment plan for you
- Discover the process of repaying your student loans with your student loan provider
- OR pass over steps #2-4 and just use StudentLoanify.com
StudentLoanify is a student loan repayment platform that helps educate you and helps you take action in paying off your student loans in the best way possible. The process is simple: You type in some general information and then you are asked a couple of simple questions such as “Are you married?” or “Are you currently a full-time teacher?” These questions help StudentLoanify look for often-ignored opportunities for you, such as whether or not you are eligible for loan forgiveness.
If you’re familiar with TurboTax, the No.1 tax software used today, then you will be able to notice the similarities in the user experience right away. Similar to TurboTax, StudentLoanify collects your relevant information and presents it to you for free in a clear concise report. After that, you just update some of your answers from time to time to make sure that you are paying what’s right for you. You want to keep something that allows you to pay your loan as quick as possible without accruing too much interest, but that also does not sabotage your budget. StudentLoanify then takes care of preparing all of the correct paperwork, and sends it to you. You just print it, sign it, and mail it to your loan provider.
You don’t need to wait forever on hold to talk to an unhelpful loan service providers who rush through calls to maximize their profits. You don’t need to pay crazy consulting fees for third party services that make the process more confusing than it actually is. All you have to do is print, sign, and mail.
Ready to take control of your student loans?
Take the five minutes to sign up with StudentLoanify so you don’t have to waste your time on busy work and can start focusing on the part of the loan repayment that actually matters: budgeting your own personal finances.Tags: Guide, Student Loan Repayments, Student Loans