The biggest financial challenge facing today’s graduates is student loan debt. While this statistic is quite startling, you need to remember that education is one factor that can increase your lifetime earnings.
This is why you need to make paying off your HELB loans debt a top priority once you graduate.
Do you have a HELB loan? Wouldn’t it be wonderful to finally pay off your HELB loan without going broke? This debt can be quite intimidating, but you don’t need to stress out about paying it off.
Here are few tips to help you pay off your HELB loan without going broke:
1. Utilize Your Grace Period
HELB allows you a grace period after your graduation. During the grace period, you aren’t expected to make any payments toward your student loan.
You need to take advantage of this grace period. Avoid the temptation of sitting back and doing nothing about your HELB loan. You should use this time to understand your loans and come up with a game plan.
If possible, you can also start making the payments but only after you fully understand your loans. If you start paying your loan before the end of your grace period, it will help you attain the discipline needed to complete the payment.
2. Do You Have a Payment Plan?
Since HELB doesn’t expect you to pay back the loan all at once, you can come up with a plan.
You can break the repayment into bite-sized pieces to make it manageable.
Some people are afraid that if they make their student loans a part of their monthly routine, they will end up forgetting it. But, do you forget to pay your KPLC bills? This is the wrong mindset.
There are two main methods to handle your monthly routine:
1. Avalanche Method
How does ‘avalanche method’ work?
Do you have any other loan apart from HELB? First, evaluate the interest rates for each loan borrowed. Note, not all your loans have the same interest rates. Once you’ve established this, prioritize the loan with the uppermost interest rates. As you do that, make sure you keep paying your other loans.
What’s the benefit of prioritizing your most expensive loans?
It helps prevent your student debt from attracting much interest, in the long run saving you money.
2. Snowball Method
Alternatively, you can adopt the ‘’snowball method’’. To get started, make minimum payments on all your loans; you pay extra for the loan with the lowest balance.
While this technique is likely to make you earn more interest, in the long run, it can be helpful if you’d want fewer payments to make every month. This progress is likely to boost your confidence.
Do you know you can use a private loan to refinance your student loan? This may help you attain a reduced monthly interest rate.
Are there drawbacks of refinancing your student loans? Yes, one of them is that you’ll forgo flexibility, consumer protections and income-driven repayment options that characterize HELB student loans.
When to Contact Your Loan Servicer
What happens if you fail to make your payments? Well, it’s best to contact your loan servicer to find out your options. You can also visit their office at Anniversary Towers to learn more about the same.
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