As the old saying goes, nothing pays quite like a college degree. In fact, studies show that college graduates out-earn degree-less peers at almost every stage in their lives, reinforcing the value of continuing education. However, the cost of college does not come cheap, often straddling new earners with potentially dangerous student debt.
Thankfully for those currently repaying their student loans, the lending experts at Laurel Road are here to help.
Upon graduating from college, students should inquire about the grace period on their upcoming loans. Grace periods typically last anywhere from 6-12 months and give payees the chance to begin developing savings for their initial payments. Once the allotted time expires, monthly payments are required.
After the repayment process begins, loan payments are set on either a recurring or manual schedule. In order to minimize the term -- or length of repayment -- of the loan, payees can adopt either an avalanche or snowball approach. Through the avalanche method, any additional monthly funds are put towards paying down the loan with the highest interest rate. In the snowball approach, these same funds are applied to the smallest amount owed, helping reduce the overall number of active loans.
However, to really take control of student loans and save serious money, refinancing for a lower interest rate is the best option. Because refinancing creates a new loan altogether, acquiring significantly lower interest rates is possible if you have a good job and a strong credit history. As a result, this can save money in interest payments and reduce the overall cost of the loan.
When coordinating debt, expenses and everyday life, it's especially important to keep a balanced budget. That's why following the 50-30-20 rule can help ensure your financial priorities stay in check. As a rule, you should allocate 50 percent of your monthly earnings to pay necessities like food and lodging, 30 percent for discretionary purchases and put 20 percent towards savings or outstanding debt. When planning, the more money that can be allocated towards the final category, the better the end result will be.
Managing your personal finances doesn't need to be a confusing process. Laurel Road offers a variety of services to help you take control of your money - from refinancing to savings and everything in between. To learn more, click here.