student finance

The loan repayment aspect of student loans, whether undergraduate or postgraduate can be discouraging. This is one of the reasons people do not consider the loan option to further their studies. Student loan providers know how expensive education can be, and how the financial situation of the students can also be. In this regard, they give ample time for loan repayment. Some of the loan repayment plans can span from 5 years to about 20 years. Of course, this seems like a long time to repay a debt, but it is mostly advisable and encouraged to repay the loan on time to uphold your integrity. The loan repayment time frame can seem so wide that you begin to feel as though there’s a lot of time for it. Don’t do that, properly plan yourself and your income to accommodate a fast repayment option. I believe you do not want to use your retirement fund to service your postgraduate loan. It is advisable to say focused and service your student loan whilst also trying to give attention to other pressing issues. So what are the days you can fast-track your postgraduate loan repayment? Are you considering taking a loan for postgraduate studies but don’t know how to go about the repayment option? Then this article is for you! We have carefully outlined and given an in-depth explanation of ways in which you can repay your student loan in ample time. You might just want to consider the following tested options: 1. Go above the minimum When it comes to postgraduate loan repayment, as discussed earlier, there is a specific timeframe with a specific amount to be paid each month. However, to fast-track your loan repayment, you can pay more than the amount allocated each month as this will increase your chances of paying off the loan earlier than expected. Making extra payments is not as easy as it seems because different loan providers have different terms and conditions. Some may put your extra payment towards the interest, while others may channel it to the principal fund. It will be of more benefit if the extra amount is paid to offload the principal fund rather than the interest. To go about this, decide where you want your extra payment to reflect. Alternatively, you can contact your loan service provider and ask them to outline their terms and how you can go about making extra payments. 2. Pay on a Bi-weekly Bases This is also indirectly related to the first option above. One way to go above the minimum monthly payment is to make biweekly payments. Many people often plan to pay their student loans once a month. But if payment is made once every two weeks, it’ll fast-track the repayment process and you’ll end up paying more than expected by the end of the year. This is a breakdown of how biweekly payment works: There are 52 weeks in a year. When you pay once every two weeks, you will make 26 payments at the end of the year. This will amount to 13 full payments annually. Consequently, making monthly payments will amount to making 12 payments annually. Moreover, when you make 13 rather than 12 payments each year, you can save on interest costs and up paying off the loan ahead of the proposed schedule. 3. Maximize Windfalls If paying off your student loan and being debt free is one of your top priorities, then maximizing your windfalls is a good way to push you further towards your goal. Windfalls are unexpected financial gains. The amount of a windfall is not specified, but they are categorized as unexpected amounts of money to you are entitled to in the most unexpected periods. Examples of windfall can be your part of a family inheritance, an unexpected raise or bonus from work, a prize from winning a competition, winning a lottery ticket and so on. Windfalls help you pay above the minimum monthly allocation of your loan. When you get windfalls, properly plan what you want to do with the money. If repayment of your student loan is of top priority, then allocate quite a substantial amount for this course. 4. Reconsider Your Payment Plan Another way to repay your postgraduate student loan on time is by reconsidering your repayment plan and switching to a new one when the need arises. If you are currently on a federal loan, you can reconsider changing your repayment plan to a shorter term. This will give you a sense of urgency and will inspire the discipline required for you to repay the loan on time. The most temporary repayment term for a federal loan mostly falls within 10 years. Consequently, if you are on a private student loan plan, you might not be able to modify or change the repayment plan as it will be locked when you finalize the loan. You might need to refinance your loan with another lender as the case might be. Private student loan providers often offer between a 5 to 20 years repayment plan. It is also important to note that the shorter the repayment plan, the smaller the interest rate. 5. Refinancing Options If your postgraduate student loan has a high-interest rate, then you might want to consider the refinancing option to pay off the debt. Refinancing your student loan simply means going to a new loan service provider with a lower interest rate and overall reasonable terms. In simpler terms, when you refinance your loans, you search for a new lender who in turn pays your previous loan service provider. After this, you start repaying the new lender. The positive side is that the new lender will have a much more reasonable interest rate and a better repayment plan that can accommodate your budget. You can use a refinancing calculator to see how much refinancing your postgraduate student loan will save you. However, there is a downside to the refinancing option. If you refinance federal loans, you end up losing the benefits that come with it like income-driven repayment plans, forbearance periods, loan forgiveness etc. Additionally, there are other ways you can adopt to help you properly plan for, and repay your postgraduate student loans. They are: Deferment Autopay Forbearance Income-Driven Repayment Plans 1. Deferment Deferment provides you the opportunity to not monthly payments over a stipulated amount of time without any interest accrued. During this period, the government pays on your behalf instead and so each payment equally counts. However, it is important to note that this does not apply to everyone as there are strict conditions that must be met before this will be allowed. They are: Currently attending school on a part-time basis Active in the military or just concluded military service Undergoing rehabilitation Currently unemployed Currently undergoing cancer treatment. etc. It is important to note that not all Federal loans are eligible for deferment so you must do your research or speak with your student loan counsellor to know if you are eligible for deferment. Some private student loan providers also provide the window for deferment but you will have to speak with them to know how it works. 2. Autopay When you put your student loan on autopay, it saves interest and generally reduces the amount of the overall repayment. Some student loan providers offer a 0.25% discount when you opt for the autopay option. However, ensure that you have a proper budget and a steady income before option for this option because autopay implies that a stipulated amount will automatically be deducted from your account every month. Also, ensure that you have that amount readily available at each point too. 3. Forbearance Similarly, forbearance also allows you to cease payment temporarily, but in this case, you are still responsible for paying back the interest. Additionally, you will need to get approval for the forbearance option too. It is also important to note that we have two types of forbearance, General and Mandatory. Some of the popular reasons people opt for the general forbearance include: Medical expenses Financial difficulties Change in employment or any other reason approved by your loan service provider. Mandatory forbearance, some of the popular reasons people apply for this include: Currently experiencing student loan burden (this means your loan makes more than 20% of your total income) You are currently in a medical or detailed internship or residency You are currently a national guard etc. Additionally, when you opt for the forbearance option, it is recommended that you at least pay the interest every month. This is necessary s as not to accrue more expenses as you will pay more on your loan in the end if you do not attend to the interest. Like deferment, private student loan providers may also offer forbearance to students but it is required that you do a thorough check and have the necessary information as the terms may differ among each loan provider. 4. Income-Driven Repayment Plans Income-driven repayment plan focuses on setting your monthly student loan payment at an amount that will be affordable for you as it considers variables like income and family size. There are four types of income-driven repayment plans and they include: Revised Pay As You Earn Repayment Plan (REPAYE Plan) Pay As You Earn Repayment Plan (PAYE Plan) Income-Based Repayment Plan (IBR Plan) Income-Contingent Repayment Plan (ICR Plan) Furthermore, it is important to note that each plan’s eligibility requirement differs and you will have to first of all apply before you gain approval. Generally, repaying your undergraduate student loan is not an easy task as it requires financial discipline. If you are discarding the thought of applying for a postgraduate student loan because of the repayment process, you might just want to reconsider as the various options listed above are designed to help you repay your loans faster before the stipulated amount of time. As a graduate student who desires to study abroad but is not too conversant with the application process, you can reach out to us and we will provide the necessary guidance needed on your journey. 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