College may have been the best four years of your life – what’s less enjoyable, however, is the student loan debt that lingers far beyond your graduation date. Luckily, there are many tips and tricks to help with student loan debt.
First, it’s worth noting that not all debt is bad. While we may wish to cancel student loan debt, having a strong credit history can play a key role in helping you qualify for a loan when you really need it. The key is managing your current student loan debt effectively and efficiently. Here are some ways to get started.
1. Be Honest About Your Debts
It’s understandable to want to avoid the realities of debt – it can be overwhelming or even scary to deal with debt head-on, but, only when you understand the overall amount you owe can you develop a plan to pay it down.
Once you’ve figured out the size of your debt, it’s helpful to organize the terms, grace periods, interest rates and repayment rules. Knowing which grace periods are more generous, which interest rates are higher, or which have aggressive penalties can be helpful in deciding which debts to pay off first.
2. Pay Down Your Debts
It may seem obvious – the key to student loan debt relief is paying the loan off, but there are a variety of strategies for consistency and success.
Consider the snowball method, where you pay down the account with the lowest balance first while continuing to make minimum payments on other debts. Once the first account is paid off, you move on to the next debt with the lowest balance. Seeing small balances disappear can motivate you to continue paying off accounts in a timely manner.
Another strategy is the higher interest rate method – you focus on paying off debt with the highest interest rate first, while continuing to pay the minimum on your other debts. This means you’ll pay less over the life of your loans, which can be empowering.
Also, consider setting up automatic payments. This ensures your debts are paid on-time every month, which is a key element in your credit score.
You can pay off your debts even smarter with Travis Credit Union’s MyInsight Digital Money Management Tool. You can add a custom sub-category to track your progress, such as, ‘Bills & Utilities: Student Loan Payoff’. This will allow you to track how much you have spent toward paying down debt and help you visualize your clearest route to being student debt-free.
3. Manage and Optimize Your Debt
If you’re juggling credit card debt on top of your student loans, call your credit card provider and negotiate a lower interest rate. Or, you can consider a good balance-transfer credit card that allows you to move debt to a card with zero interest for a period of time. By putting fewer dollars toward interest rates, you’ll be able to pay off student loans more quickly.
Interest rates with banks are low right now — so why not take advantage? Travis Credit Union can also help you consolidate your student loan debt into one, low-interest payment. If you’re interested in discussing this option, please visit a branch or call our Member Service Center at (800) 877-8328 for assistance, or Chat with Travis.