Effective debt management is one of the important lessons of life that a student must learn once he graduates out from the college. Prompt repayment of student loans is necessary as it would directly influence the credit report of the student. Late repayment or defaulted loan payment are considered as bad credit. However, effective debt management is a relatively simple lesson that could be learnt in four easy steps.
The first important strategy is to pay bills on time. Every student loan comes with a 6-month grace period before the repayment period starts. This period has been provided to help graduated students get themselves a job and then repay the loan. Loan repayment should never be ignored. Graduates could opt for an automatic remittance from the account. In case of any unavoidable late payments, it is wise to inform the lender in advance.
The next important strategy is to pick a right repayment plan. Many lenders offering student loans have flexible repayment options. Graduates earning low salaries could opt for an income-sensitive repayment plan, where the monthly installments are determined based on income. Graduates with higher-paid jobs could happily go for a standard repayment option.
If the graduate has a heftier loan amount and is unable to repay the loan due to low salary, he could even consider the option of refinancing. However, student loan consolidation is best when it is done within the grace period. Student consolidation loans are available at low interest rates and extended repayment period.
Deferment of the loan is the last important strategy. If graduates are marred by unemployment, economic hardship or a desire to return to school, they have the option of deferring their loan repayment. While the deferment period is three years with unemployment and economic hardship, the loan could be deferred to an unspecified period if the graduate continues his studies.
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