Financial Care for Life > Managing College Debt
Managing College Debt
Managing Begins with Understanding: Key to Managing Your Educational Debt
Getting a good education requires a much larger financial sacrifice than it did in past generations. With tuition increasing year over year, student debt is becoming more crippling than ever for college graduates. Balancing loan payments and other expenses can prove to be a challenge despite the salary benefits of a college degree. Below are a few considerations to help manage your college debt.
Understanding the Balance Between Reducing College Debt and Increasing Savings
It’s critical you begin your planning and budgeting with a firm understanding of the principal and interest you owe to your student loan lenders. Once understood, you can start the process of developing a plan to address your loan debt and determine the options available to reduce it.
Equally important is understanding the impact your educational debt will have on your savings, particularly your long-term savings ability. Failing to save enough of an amount – or even any amount – for retirement because of outstanding student loans will have a substantial impact on your future retirement readiness. Those older in age could face a serious shortfall in savings, while younger individuals will miss out on the advantage of a long investing time horizon.
Whether you consider loan consolidation or are eligible for a student loan forgiveness program, it’s important you explore your options and find a path that fits your budget, lifestyle and long-term savings plan.
Utilizing Auto Payments
Automatic payments are your best friend. Once established, it ensures you’ll never have a late payment and your on-time payments will boost your credit score. Private loans come with hefty late payment fees so it's critical they be avoided at all costs. Also, many lenders provide discounts for automatic payment withdrawals so it’s worthwhile you enroll as soon as possible.
Knowing Your Loan Terms
It’s important to be an educated borrower. Take the time to read your loan terms so you understand your repayment terms, interest rate and any penalties (especially those associated with earlier repayment). Learning the terms of your loan will enable you to create a short- and long-term plan that meets your expectations and financial needs.
Unfortunately, navigating your educational debt can be a daunting task. The KIG team can help determine the best path forward to paying off your debt as quickly as possible through a repayment strategy that aligns with your unique needs and goals.