Private student loan debt (cant you just hear the dramatic background music kick in every time those words are uttered?) is a problem for so many of us college grads today. Student loan debt is no fun regardless if its federal student loan debt or private student loan debt, but ridding yourself of your private student loan debt should take priority over all other debt in your life (with the exception of credit cards). Today I have put together “5 Tips to Help with Private Student Loan Debt” to help you on your journey of becoming private student loan debt free!
1. Make all of your private student loan payments on time. Failing to treat your private student loan payments with the same amount of attention as you would treat your credit card debt, could hurt your credit rating in the future. If you are having trouble making your student loan payments, you need to open the lines of communication with your lender. Most private student loan lenders will be willing to work with you.
2. Consolidate your private student loans, if you can. Private student loan consolidation is very, very limited these days, in fact most lenders are not doing private consolidation loans at all anymore. With that being said, if you can find a lender willing to consolidate your private student loans it may be a good deal for you based on the following:
a.) the consolidation will reset the term of the loan and this may reduce the monthly payment, which can be beneficial if you are having problems making your monthly payments (keep in mind however, this will increase the total interest paid over the lifetime of the loan).
b.) because the interest rates on private student loans are based on your credit score, you may be able to get a lower interest rate via a private consolidation loan if your credit score has improved (quite a bit) since when you first obtained the loan.
3. Know your tax options. If you meet income requirements, you can deduct up to $2,500 per year in interest on ANY loans used for higher education. Most private student loan lenders should present you with the applicable tax documents by January 31st of any given year. If you have paid interest on your private student loans (which you have, if you made any payments) and have not received any tax documents from your lender, contact them.
4. Prepay as much as you can. One of the best things you can do for private student loans, or any student loans for that matter is to make prepayments. Both types of student loans (federal and private student loans) will let you make penalty-free prepayments. To learn more about private student loan prepayments click here.
5. Budget, budget, budget. I know it sounds redundant, (trust me, I too am paying off private student loans) but budgeting plays a key role in paying off high interest debt, such as private student loans. You need to cut your frivolous spending, and making tackling your private student loan debt a serious priority… this means making as many prepayments as you can to reduce the balance of your private student loans. Making the minimum monthly payments is great, but making MORE that just the minimum is even better (see tip #4 for prepayment advice). Mint.com offers a great (and free) personal finance software to assist you in managing your money and provides you with budget planning tools.
I hope you have found these “5 Tips to Help with Private Student Loan Debt” helpful. if you have a tip for dealing with private student loan debt, please feel free to share!
TheStudentWhoGotScrewed:
is a 27 year old college graduate from the University of Wisconsin-Milwaukee, currently living in the Chicago, IL area. Read all of my posts by clicking here and read my profile by clicking here. Share your student loan experiences, stories and tips with me and other readers by dropping a comment!
Tags: bankruptcy, credit, debt, Private student loans, student loan debt, student loans
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