You’ve done it – you graduated from college, earned your degree and have the diploma to prove it. You’re ready to take that next step. There’s one thing, however, that’s still tying you to your postsecondary education.
Although your schooling may be over, your financial aid has not ended yet. Within six months of your graduation, you will need to start paying back the money you borrowed at the start of your education. Before you get overwhelmed at the thought of drowning in debt, know that there are ways to keep yourself above water while paying back your loans. Keep the following tips and tricks in mind while paying back your loans, and make your repayment as stress-free as possible!
- Choose the right repayment plan
You may not know it, but you don’t have to stick with the repayment amount you’re given when you first begin to pay off your loans. The standard plan helps you pay off your loan quickly – it’s structured to help you pay off your loans in 10 years. However, your monthly payments will be on the higher side.
If you don’t mind taking longer to pay off your loans, you can get yourself into an income-driven repayment plan, which typically gives you a lower monthly payment that will help you pay your loans off in about 20-25 years. However, that also means you’ll be paying more interest over the course of your repayment, making your total amount paid likely more than the original amount of your loan.
Choosing the wrong repayment plan can have detrimental effects on your budget, your bank account and your credit score if you fall behind in your payments. Make sure you get into a repayment plan that works for your situation, and helps you achieve your goal – a quick repayment time, or lower monthly payments. You can even consolidate your loans for a better repayment option.
Finally, also look into federal loan forgiveness programs when you’re researching repayment options. Income-driven repayment plans can offer loan forgiveness at after 20 or 25 years, meaning that even if you have a balance at the end of that time, it can get forgiven by the government. Additionally, check with your employer to see if they are part of the Public Service Loan Forgiveness Program. The Public Service Loan Forgiveness Program forgives the remainder of your loans if you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer. Qualifying employers include the government (any level), non-profits that qualify for 501(c)3 tax-exempt status, or non-profits without 501(c)3 status that provide qualifying public services.
- Don’t miss a payment
After you choose your repayment plan and set your monthly payment amount, find out how you can set up automatic payments through your loan servicer. By having your payment automatically deducted from your bank account every month, you won’t have to worry about forgetting to make a payment on time or missing one altogether.
Missing or late payments are strikes on your credit score. If you are in a situation where you cannot afford your next payment, contact your loan servicer to learn about your options to reduce or postpone your payment, and keep your loans in good standing.
- Consider all your options before postponing a payment
Of course, there may come a time when you are experiencing some financial hardships and your loan payments need to take a backseat to other necessities. The two ways you can temporarily stop your payments are through deferment or forbearance. While they may be helpful to alleviate immediate hardship, they don’t actually help you pay back your loan. Your loan will continue to accrue interest, despite you not making payments, and your interest may even capitalize. This means, when you resume your payments, your loan balance will be even higher than it was before.
If you need some relief in your loan payment, make sure you consider other options before flat-out postponing your payments. Contact your loan servicer to see if you can get put on a different repayment plan that can lower your monthly payments.
- Never pay for loan advice or help
While you’re browsing the internet or researching information about your loan, you may encounter programs that will charge you a fee for loan advice. The U.S. Department of Education and loan servicers will never charge you for their service.
However, your loan servicer can only help you if they can reach you. Keep your contact information up-to-date with your loan servicer, so they can quickly and easily get in touch with you to talk about repayment options or any changes or concerns there may be with your loans.
- Contact College Now with any questions you have about your loans
If you have more questions about your loans or are unsure about how to start paying back what you owe, College Now won’t charge you for loan help and loan advice, either. If you want to consolidate your loans, learn about ways to lower your monthly payments or ask questions about loan forgiveness, contact College Now Greater Cleveland or stop by our Downtown Cleveland Resource Center today. We will never charge for our services, and we will make sure that you are on the best track to repay your loans in a way that you can afford and that makes the most sense for your post-graduation situation.
College degrees are quickly becoming more important than ever – by 2020, 65 percent of open jobs will require a degree beyond a high school diploma. Not only are degrees vital to improve the livelihood of Ohio citizens, a boost in degree holders will also be economically advantageous for our state, as well as our Cleveland region specifically. Ohio is the seventh largest state, but only 38th in educational attainment, and in Northeast Ohio alone, there are 40,000 open jobs – but 70,000 unemployed individuals. This is evidence of a widening skills gap between what credentials our residents have – and what credentials our residents need.
The importance of higher education needs to be understood. Although college is expensive and can be challenging, the opportunities that having a degree or certification can bring are far more substantial than those that are found with just a high school diploma. Individuals with less than a high school diploma have an unemployment rate of 8 percent and those with a high school diploma are unemployed at a rate of 5.4 percent. Individuals with an associate’s degree, however, are unemployed at a rate of 3.8 percent, those with a bachelor’s degree at a rate of 2.8 percent, and those with a master’s degree at a rate of 2.4 percent. The average unemployment rate of all workers is 4.3 percent.
Not only does pursuing a certificate improve your chances of employment, it also increases your lifetime earnings. With so many students choosing not to pursue higher education due to the cost, knowing that the investment will pay off in the end is a key piece of information. Workers with their bachelor’s degree make, on average, more than $600 more per week than workers with less than a high school diploma, and more than $400 more per week than those with their high school diploma. This adds up to quite a bit over the course of a career – the typical bachelor’s degree recipient can expect to earn about 66 percent more during a 40-year career than the typical high school graduate would earn over that same period of time.
Earning more over a lifetime, of course, doesn’t change the immediate expense of a college degree. Luckily, many organizations and corporations understand the importance of higher education and want to advance their own workforces’ levels of education. Students right out of high school can look into job opportunities with companies that will help pay for their employees’ educations during their tenure with the organization, and adults who are already employed but want to pursue a degree or certificate in order to advance their economic well-being and family life should check with their companies to see what options might be available to them. The pursuit of higher education and advanced credentials and degrees are economically advantageous to employers; they want to employ the best workforce possible, and by offering their employees education incentives such as tuition payments, they can retain and improve their top talent, and better their employees’ economic well-beings.
Enhancing the workforce is a huge way in which higher education pays dividends back into the community. Beyond having a workforce that is more prepared for 21st century jobs, though, having residents who are more educated is vital for the local economy. If the educational attainment numbers in Northeast Ohio can increase by just one percent, there will be a two billion dollar increase in the region’s GDP. This leads to a cycle – the more the economy in the region improves, the more it will attract residents to the area. Those residents will help contribute to the continued growth of the region, and the cycle will begin again.
Beyond economic impact, however, is the culture change that increased educational attainment can bring to a community. The more adults who have degrees and certificates beyond high school, the more younger students will see that path as a normal, beneficial path to take. The Atlantic conducted a study of students accessing higher education, which found that 76 percent of students with two college graduating parents entered into a two- or four-year degree program immediately after high school; only 37 percent of students from no-degree families did so.
Increasing the number of degree holders in a region is impactful is so many ways. It improves the region economically, it improves individuals’ economic lives and it strengthens the college-going culture that is needed to maintain the forward momentum. At College Now, we’re dedicated to helping to improve our region through the pursuit of education after high school.