Helen Lee Schifter is a former arbitrage trader who wrote her first article about investing in student loans five years ago. She has continued to write about the subject, and each of her pieces has been well-received by many readers.
Best Resources to Help You Pay Off Your Student Loans
1. Credit Card Companies
In recent years, credit card companies have created interest-free periods during which their customers can pay off their credit card debt without incurring any interest charges. An interest-free period is usually several months or years; when it ends, customers can still keep their credit card debt at the current rate (usually 18% or 22%). The details of these offers differ from one credit card company to another, but as a general rule, they are not as generous as they used to be. The companies have recently increased their minimum credit card payment obligations to 15% of the remaining balance after the interest-free period.
2. Student Loan Consolidation
When borrowers have multiple types of student loans with different rates or interest-free periods, they can use their new loan consolidation program to pay off their most expensive loans first. When the new loan starts, the borrower will be given a lower interest rate, saving them money over the long term. The borrower will still have to make regular payments for several years until their debt is paid off.
3. Refinance Your Loans
Suppose your credit card payments are enormous or have too many credit card accounts at high-interest rates. In that case, you may want to consider refinancing your loans after you finish school or when your financial situation improves. You can consolidate all your loans into one new loan with lower monthly payments, and once the first few years of repayment are done, you can start paying off more expensive student loans with this new low-interest loan. You will want to be careful with this option because the new loan has a fixed interest rate, which means you cannot save money in the long term. Despite this drawback, it may be your best option in a short time if you are desperate to save money.
4. Pay As You Earn Repayment Plans
Only certain kinds of student loans allow borrowers to enroll in monthly payment programs that are less than 10% of their monthly income. For example, the borrower must make monthly payments based on 30% (or less) of their income when they first apply for a loan. Still, after a few years of persistent payments, the borrower may be able to make monthly payments for as little as 10% of their income.
Helen Lee Schifter advises paying off student loans; you need to keep track of your finances and understand the best sources of income. Paying down debts is essential no matter what stage your life is at, but especially as you mature. Be careful in debt consolidation plans not to borrow too much money. You want to reduce your debt as much as possible to start investing for your future.”