First and foremost, congratulations to the class of 2018! You have now entered an exciting period of your life where you can follow your passion out in the “real” world. Now is also the time, however, where you have to start thinking about your career, a place to live permanently, and paying off your student loans. When it comes to your student loans you typically have a grace period of 6 months after graduation until you have to start repaying. You should, however, start making a game plan. Here are some tips to help you get started:
1. Get to know your loans
Do you have federal or private loans? Perkins or Stafford loans? What are your interest rates? It’s important that you keep track of the loan type, lender, balance, and repayment status for each of your student loans. If you’re not sure what kind of loans you have, you can visit the National Student Loan Data System at www.nslds.ed.gov to see federal loans.
2. Verify when payments are due
Different loans have different grace periods. A grace period is how long you can wait after leaving school before you have to make your first payment.
3. Put yourself on a budget
It’s critical that you live within your means by prioritizing expenses and spending only what you can truly afford. Begin by documenting your monthly income and living expenses. Make sure you have enough income to cover your “needs”— rent, electric bill, transportation, food, student loans — before spending money on “wants” — entertainment, vacations, and other fun stuff.
4. Consider setting up automatic payments
Missing payments can quickly get you into financial trouble. Pay on time all the time. Setting up payments automatically through your checking account will dramatically reduce the chances of missing a payment deadline.
5. Don’t increase payment period if possible because interest charges can add up very quickly
If possible, pay off your loans within the standard 10-year period. Repayment programs that defer or lower payments will delay or reduce your monthly payment, but you will pay over a longer period of time and your balance will be larger.
6. Pay off loans with the highest interest rates first
You won’t get penalized for paying off a student loan early. Consider using extra cash to pay down loans with the highest interest rates first. This strategy can save you hundreds or thousands of dollars in interest.
7. Communicate with your lender
If you foresee problems making a loan payment on time, it’s important to communicate proactively with your lender or service provider. Be up front about issues that you encounter, and your lender should help you reach a solution and avoid defaulting on your loan.
8. Open and read all of your mail
Pay close attention to every piece of mail you receive about your loans, both paper and electronic. Don’t ignore phone calls or letters from your loan service provider or a collection agency. If you have a problem, it won’t go away on its own.
9. Take advantage of tax deductions
Depending on your income, you may be able to deduct up to $2,500 on the interest you pay on your student loan each year. This deduction will help reduce your annual taxable income, possibly resulting in a smaller tax bill.
10. Explore your repayment options
If you are having trouble making loan payments, make sure you understand your repayment options. Deferment and forbearance temporarily stop payments, but interest continues to accrue and the loan balance continues to grow.
USC Credit Union can help with that last one! Through our Student Loan Refinance service, you can reduce the cost of your student loans with a rate as low as 2.64% APR!*
Learn more here about whether student loan refinancing is right for you.
*Please read below for USC Credit Union's full disclosures, rate details, terms and conditions.
Terms and Conditions:
For both loans, you will be required to review the Application Truth in Lending Disclosure prior to submitting an application. The minimum loan amount is $5,000. Your interest rate will be determined by your credit score or your cosigner's, whichever is greater. Membership is required. Must qualify for USCCU membership and membership fee may apply; please call (877-670-5860) or visit www.USCCreditUnion.org to confirm eligibility. Must be 18 years old or older. Must pass Chexsystem. All accounts are subject to approval process. Terms and Conditions Apply. USC CREDIT UNION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident and meet USC Credit Union's underwriting requirements. This information is current as of April 1, 2018 and is subject to change.
Variable Rate: 2.64% annual percentage rate (APR) effective 4/1/2018 – 6/30/2018. 60 monthly payments of $17.92 per $1,000 borrowed. Borrowing $20,000 at 2.64% accrues $1,370.99 in interest during a 5-year repayment term. These monthly payments and accrued interests are for illustration purposes only. If approved for a loan, the variable interest rate offered will depend on your credit history and the Credit Union’s underwriting standards. Variable rates from 2.64% - 6.88% APR (with AutoPay). Rate is variable and subject to change. Interest rates on variable rate loans are capped at 19.15%. Lowest variable rate of 2.64% APR assumes current 3-month LIBOR rate of 2.02% plus 0.87% margin and subtracting the 0.25% AutoPay discount. For the variable rate loan, the 3-month LIBOR index will adjust quarterly and the loan payment will be re-amortized and may change quarterly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The above figures assume no changes in the LIBOR index, no pre-payments, no additions to the loan principal, and all payments made in a timely manner over the life of the loan. For further information on rates and costs for the Variable Rate Student Loan Refinance, see the Application Truth in Lending Disclosure.
Fixed Rate: 3.25% annual percentage rate (APR) effective 4/1/2018 – 6/30/2018. 60 monthly payments of $18.19 per $1,000 borrowed. Borrowing $20,000 at 3.25% accrues $1,696.00 in interest during the 5-year repayment term. These monthly payments and accrued interests are for illustration purposes only. If approved for a loan, the fixed interest rate offered will depend on your credit history and the Credit Union’s underwriting standards. Lowest fixed rate of 3.25% assumes enrollment in AutoPay. For further information on rates and costs for the Fixed Rate Student Loan Consolidation and Refinance, see the Application Truth in Lending Disclosure.
AutoPay is a voluntary repayment benefit managed by USC Credit Union that awards a 0.25% interest rate reduction to borrowers that elect to have their monthly payments electronically deducted from a designated checking account. To be eligible for the interest rate reduction for automatic payments, you must be signed up for automatic payments through USC Credit Union. If at any time automatic payments are stopped or the loan is not in good standing, the rate discount will not be applied.