Students planning to pay off their student loans now have some leeway. Thanks to the coronavirus relief act, you won’t need to start making payments until January 2021. But if your finances look promising, you can prepare now for the fast-approaching due date. Consider talking to your servicer about repayment options. According to Loanry’s Top 7 Student Loan Lenders, these banks are especially open to helping students and graduates navigate loan payments. With the January 2021 deadline just a few months away, here are some ideas for making the most of your resources.
Start Paying Your Loan Early
Even though you still have some time, you can begin making payments now. You’ll have less to worry about when you need to start repaying student loans. Plus, you can add to your credit score. Even if you already have good credit, it’s not a bad idea to pay down debt as much as you can, as soon as you can.
Since you won’t receive any billing statements until 2021, you will need to contact your lender to make payment arrangements. Loanry’s Homework on the Top 7 Student Loan Lenders reveals that highly-rated servicers offer student-friendly terms. Some lenders allow you to start paying interest before the repayment period begins.
Even if you’re taking time off and plan to return to school eventually, you may want to begin repaying some of your loan now if you have extra cash. From the time you leave school, you get a six-month grace period to repay. But the grace period is only a one-time offer. If you take advantage of it now, you won’t be able to do so again when you graduate. If you’re still in school and looking at financing options, sites like loanry.com can help.
Make a Dent in Your Other Debts
If you have credit card debt or other outstanding bills, use your extra cash to start paying those down. US News recommends setting up a budget so you can gage how much you can afford to pay off each month. Then, get started on your largest or highest-interest-rate debts first. Making a dent in your other debts will leave you with more resources to pay off your student loans when the time comes. And remember to pay more than the principle; otherwise, you’re just paying interest.
Shore Up Your Emergency Fund
Saving for a rainy day is always a good idea. If you’ve started putting money away to cover unforeseen expenses like medical bills or car repairs, now may be a good time to add to your stash. Financial experts recommend setting aside at least three to six months’ worth of living expenses so you have something to fall back on if you lose your job or find yourself in need of extra cash. If you can’t afford to set that much aside, even a few hundred dollars can come in handy if you’re faced with car repairs or dental bills.
Keep in mind that the purpose of an emergency fund is to help you avoid going into debt — or at least minimize how much you might have to borrow — when the unexpected happens. It doesn’t necessarily boost your credit score. Be wary of credit score myths as creditry explains that lead you to believe that how much you have in the bank is what really matters. Here’s what impacts your credit score: If you overdraw, fail to pay those amounts back, and wind up in collections. Loanry’s Homework on the Top 7 Student Loan Lenders can direct you to banks that extend loans to students with little or no credit.
Tackling student loan debt can be overwhelming. While it may be tempting not to think about it until your first payment is due, being prepared now can make the debt-payment process much less stressful. Check out lonary.com and other resources to learn more about staying on top of your student loans.