October 27, 2022
For some people, their first loan experience may be a student loan. While tackling loans can be very overwhelming at first, there are many things you can do to help make the process more manageable. Here are some helpful tips to get you started paying off your student loans!
When you have multiple student loans, it is a good idea to approach payments strategically. Paying off loans that have the highest rates of interest first can avoid unnecessary interest in the long run. Evaluate your interest rates on each loan to help you decide which loans to tackle first. Also look to see if you have any private student loans. These are from commercial lenders and have less benefits than a federal student loan. They usually have higher interest rates as well.
When receiving certain kinds of student loans, like private loans, some students may feel a new sense of financial freedom with the ability to buy the things they want. However, it is in your best interest to spend this money wisely and only on school-related costs like tuition, rent, and other necessities. Depending on your lender’s policy, you could potentially face loan termination and fees for using the loan on non-school related expenses. Generally no one is really tracking how you spend, but remember that borrowed money eventually has to be paid back with interest.
Paying off loans quickly can be beneficial. When finances allow, making payments to the principal (the amount of money you originally borrowed) of your loan decreases the amount of interest that will accrue, helping you pay less money down the road. Make sure to talk to your lender to make sure your money is going where you want it to, since many lenders will put your payments toward outstanding fees and interest before your principal.
When deciding how many loans to take out, keep in mind long-term financial goals and plans after graduating. Many loan programs will offer more than you actually need to pay for tuition and education expenses. This is a general estimation based on the financial situation of you and your guardians. Everything you take out will have to be repaid with interest eventually, so it’s smart to accept only what is necessary.
If you would like more information or help understanding your student loans, come visit us at Citizens First Bank to speak with one of our financial experts! We have savings plans as well as loans to help you secure your finances! Stop in, give us a call, or visit our website today to learn more about how we can help with your student loans or any financial needs!