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Why are students using payday loans?

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 Money Elizabeth

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There appears to be a rising trend that shows that more and more students are taking out short term loans.  Research by the National Union of Students (NUS) shows that up to 46,000 undergraduates are using what they term high risk debt (which includes payday loans, cheque cashing and doorstep loans).  They suggest a number of reasons for this which relate, in the main, to funding their living costs and fees. .

Some highlights from their research show:

  • the weekly cost of student accommodation has nearly doubled in 10 years (£60 – £118);
  • 50% of students worry about meeting basic living expenses like rent and utility bills;
  • over third of students receive no family financial support.

These stats show it is not a typical student lifestyle being funded via a payday loan, but the essentials.

So worried are the NUS about the risk of spiralling debt problems in the student , that they are calling on a ban of all payday lenders from advertising in student magazines, student residences and on campuses.

Payday loan giant Wonga took the unprecedented step of not advertising to students last year and removed all pages from their website in 2012 that could have been construed as targeting students. This has not, however, currently stopped other companies trying to.

Students themselves, has also taken a novel approach and launched their own “payday loan” company specifically for the student market. Unlike normal lenders they have a number of interesting features:

  • no rollovers;
  • a 10 day grace period – in case of student loan problems;
  • a fixed cap of interest – you can never owe more than 50% of what you borrowed;
  • a lower rate of interest.

So even the students themselves see that there is a need for access to short term finance, and they feel they are able to offer a more competitive and student friendly service themselves.

What does the industry say?

The Consumer Finance Association, which represents some of the main payday providers, said students would need to be in regular employment to qualify for a loan from a reputable lender, and that simply banning advertising in campuses would not remove the issue.

The new financial watchdog, the Financial Conduct Authority (FCA), has issued new regulations for payday lenders which came into force in July and include:

  • restrictions on the number of rollovers (ie.how many times a loan can be extended);
  • wealth warnings on ads;
  • more rigorous testing on affordability.

The aim is to remove the less than reputable loan providers from lending.

Other options for help

Students are being advised to think carefully before logging on and applying for a payday loan.  There are a number of alternatives students could look at first.

Some universities have access to learning funds where students can apply for funds if they are struggling to pay for their studies.

Other finance products such as an 0% credit card or 0% student overdraft may help cash strapped students in the short term and means they are not actually having to pay back interest on the borrowing.

Credit Unions are another source of low cost small term finance loans – more information is available here: http://www.findyourcreditunion.co.uk/home.

The Bank of Mum and Dad could be an option before turning to a payday loan for students. Or, those that live close enough can lean on them in other ways to help reduce their living costs.  Asking for a loan or moving back home to keep debt down is not a bad idea.

Summary

As you can see there are a number of reasons why students are turning to payday loans and why it is a worrying trend in some people’s eyes.  That said, payday finance is not the only option available to students who need a short term injection of cash.

About the author: Emily Green is a freelance personal finance writer living in Hong Kong. She loves travelling and is planning to relocate to New Zealand within the year.

5 Reasons You Need to Solve Your Credit Issues NOW

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I know it isn’t easy. Climbing out of debt was one of the biggest struggles of my life.

But I did it, and looking back toward that ugly black hole, I can tell you there are some things I wish I would have done better. I could have shortened the process.

However, when you’re staring at a stack of bills and wondering what to do, it’s difficult to think about strategy, isn’t it?

Bridge at Free Financial Advisor

There are so many reasons why you need to solve your credit problems, but the five biggest, in my mind are these:

  1. Studies show that the real money can’t be made until you’re able to focus long term. When I had mountains of debt I had to think about how to get food on the table tomorrow instead of how to grow my business. There’s no mystery why my business started growing quickly when it did: I’d finally climbed nearly out of debt and began attacking my income streams strategically instead of tactically.
  2. You’re stuck in pointless meetings and negotiations. I spent so much time keeping my creditors at bay that I don’t know how I found time to make my payments.
  3. Sleep becomes difficult, and it’s hard to unwind. Even during family excusions, I felt the weight of our debt. Every time we bought ice cream or went for a bike ride, my thoughts were on how guilty I felt either spending money or enjoying myself.
  4. You have to search high and low for money. To solve credit problems right now, I had to turn to whomever would give me money. In the UK it might be someone like Wage Day Advance, while in the US, if it weren’t a relative, I’d have few resources. You don’t want to be begging people or taking wage advance loans forever.
  5. Repayment terms are aggressive and can create a debt spiral. At some points I was taking on new debt to pay off the old ones. By focusing on my debt hard and working to climb out fast, I finally was able to say goodbye to financial difficulties and nearly immediately said hello to financial success. You can be as aggressive on your end as creditors are on theirs. Check out this story from Wisebread – Taming Your Debt, Aggressive Repayment Strategies.

Debt doesn’t need to be a black hole. I often told myself as I was climbing out of debt that even Donald Trump had been bankrupt. It’s funny that I’d hold up him as a beacon of hope, but at the time, “the Donald” was a guy that had resurrected himself successfully after some really hard times. I vowed to do the same, and on a much smaller level (thank god!) I’ve done it.

5 Questions to Ask your Mortgage Broker Before Signing Anything

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Taking on a home loan can be a daunting experience, and one of the biggest decisions you will ever have to make, so it is crucial to have all the facts at hand when deciding where to get your loan. Despite the solid reputations of the big banks, you should strongly consider mortgage products from the smaller banks, such as the BOQ Clear Path Home Loan, which can offer very competitive interests rates and often beat the big banks hands down.

Mortgage brokers at Free Financial Advisor

Regardless of where you go to get your home loan, the following five simple questions will help you navigate and simplify the process, any mortgage broker worth their salt should be able to give you clear and concise answers.

Do you have references from previous customers?

Whether you are getting renovations done, hiring a new employee, or looking for a babysitter, the first thing you want to have are references from their previous customers. This is such a simple question that it is often overlooked, but getting a home loan is life-changing decision and it makes sense to talk to your brokers previous or current customers to get the low-down on how well they did their job. If this question is met with evasion or shrugged off, its time to find a different broker.

What is the best interest rate you can get me?

The most important factor in any home loan is the interest rate. Having a clear understanding of how the interest rates of various loans are structured enables you to compare loans like-for-like to find the one that suits you best. Some banks try to lure customers in with a special rate, only to have it revert to the standard variable rate after one year or less. Don’t be fooled by such offers, ask your mortgage broker to explain how your interest rate might fluctuate over the entire life of the loan and whether a fixed rate or variable rate loan is best for you.

What are all of the fees will I have to pay?

There are a plethora of fees associated with getting a home loan and you should be wary of fine print and vague language when going through the application process. Ask your broker to explain how all fees are calculated, from first applying for the loan to finally receiving the money, and then on, for the entire life of the loan. Many savvy banks are now offering fee-free applications for their home loans, for example, the Clear Path Home Loan from BOQ. Not having to pay an application fee can take the uncertainty out of applying for home loans, as if you are not successful, or change your mind, you have not committed any money and can move on to consider other options.

Are there any penalties for overpayment or early payment of my loan?

Paying off your loan early is the key to saving money and owning your home sooner. If interest rates drop, and you can afford to pay more, you don’t want to be penalised do you? Ask your broker to explain if any administration fees apply for paying more than your monthly repayment or if there is a penalty for repaying your entire loan early.

What documents do I need to provide and how long will the loan take to be processed?

Supplying the requisite documents is essential to making your application proceed smoothly and quickly. Ask your broker for a complete list of the documents you will need to provide, this will usually include proof of identification and employment, bank statements, proof of your liabilities and assets and depending on your situation, a credit history and tax records. Your broker should be able to give you a clear time-line for the processing of yourapplication once you have supplied all of the necessary documents.

Armed with these five simple questions, you should be quickly able to tell whether your broker is reliable, professional and able to provide you clear answers to help guide you through the application process.

4 Tips to Pay Down Student Loan Debt

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I can’t think of a better way to start of one’s adult life than to do so with over $35,000 worth of debt, can you?  Doesn’t the idea of starting your career already knee-deep in the hole sound wonderful?  In the words of Lloyd Christmas from Dumb and Dumber, “mmm..that sounds good.  I’ll have that.”

Or I won’t.

The average college graduate now leaves college with over $35,000 worth of student loan debt — many have said that the student loan bubble, which now tops $1 trillion (yes, that is trillion with a “T”) is the next major “crisis” in America.  I submit that it’s not the next major crisis. It’s already here.  In June, Congress couldn’t figure out what to do about student loans, so in  their infinite collective wisdom, they decided to let interest rates double from 3.4% to 6.8%.  Thanks.  We all appreciate that.

If you’re one of the umpteen thousands of people paying off oodles of student loan debt – how do you take care of it?

OG’s Student Loan Debt Tips

Step 1:

Be realistic with how much you owe.  Get an accurate count of a) who you owe; b) how much and c) the interest rates.  Many people have government and private loans spread hither and yon.  Before you create a repayment plan, you have to be honest about how much you have.

Step 2:

Build your personal financial plan.  This includes student loans, but also should include building a cash reserve, family planning, retirement planning, and other financial goals.  Having a singular mindset of  “I’m paying off my student loans before I do anything else… could lead to burn out and could impact how fast you reach your true goals.  Plus, depending on your career choice, you may be eligible for deferment or outright forgiveness.

Step 3:

Create a debt payment plan.  You have two options when it comes to paying off student loan debt: pay based on your income, or pay based on your indebtedness.  Visit www.studentloans.gov and compare payments to determine what’s best for you and your personal financial situation.

Step 4:

Work your plan and throw off discouragement.  Follow through with your well thought out plan.  You did steps 1 through 3, now just execute.  It will become tiresome and you will feel at times like you’ll never get it done – but you will.  Track your progress monthly and watch the balances fall.

Student loan debt can seem insurmountable, but with the right well-thought out plan based on your personal financial goals, you can pay those off quickly and efficiently and move on to your other financial goals!

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4 Guidelines for Paying Down That Credit Card Debt

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If you’re like me, then the past month or two of your life has involved getting your financial ducks in a row in order to file your taxes. Now that tax season is essentially over, it’s a good time to take a look at your credit card situation before you take a much-deserved break from obsessing over your finances. If you’ve got any significant credit card debt, then you’re probably thinking of the best strategy to go about paying off that debt. As a former victim of credit card debt, I know that drowning in debt is not fun, and often leaves you feeling trapped. However, I’m here to tell you that you can get that debt paid off, and it’s easier than you may think as long as you are responsible with your spending. In addition to being responsible, stick to the four guidelines below to get that debt paid off most effectively.

 

  1. Pay down your highest APR credit card debt first. This point is the most important, and should probably go without saying, but I’m going to say it anyway. If you have several different credit cards that you’ve accrued debt on, you need to pay off the balance that is charging you the most interest first. If you fail to get those high-interest credit card balances paid down, then you will find yourself falling deeper and deeper into the debt hole.
  2. Always make the minimum payment. Sometimes it may seem as if there is no end in sight to the debt you have accrued. Since I’ve personally been through this myself, I know that there is an end in sight. However, if you fail to make your minimum payments each month, your credit score is going to take a pretty significant hit so that even when you have all your debt paid off, you will end up with a poor credit score, which isn’t going to be useful when it comes time to buy a house or car. Generally, the minimum payment each month isn’t a huge amount of money, so do everything you can in order to get that minimum payment in.
  3. Consider a balance transfer. If you have a decent credit score but have accrued sizeable debt on credit cards that charge high interest rates, it may be in your best interest to consider a balance transfer in order to consolidate your debt onto a credit card with a 0% APR introductory period on balance transfers. Not all balance transfer credit cards are created equally, however, so you will want to make sure you compare credit cards so that you can find a card that offers a long 0% introductory APR period. The longer the intro period, the more time you have to get that debt paid off without accruing any interest.
  4. Get rid of debt before trying to save. Generally, the credit card debt you accrue will charge a much higher interest rate than the interest you will earn on cash that you save. While it’s always smart to have a small stockpile of cash for extreme emergencies, most of your income should go to paying down that debt. If you try to save most of your money before paying down that credit card debt, you’ll be stuck in debt for much longer than you need to be, as well as hurting your credit score.

 

This article was written by Logan Abbott. Logan is the editor of MyRatePlan.com, and a personal finance and credit card expert with over a decade of experience.

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Behind on Your Bills? 5 Easy Steps to Sanity

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Impossible? You can do that…but you can’t keep doing the same thing you’ve been doing.

I was talking to my friend Tony last week. “I can’t seem to get ahead,” he said. Every time something good happens, something bad comes along to knock me back down.

I remember this feeling. When I spent an entire year with little income, it seemed like every time I did something good, like get a credit card below the maximum, my muffler would be dragging behind my car.

How did I get ahead? How did I counsel my clients in this situation to get ahead? Put away the firehose.

When the fires from debt collectors are all around you, it’s easy to panic. They make good arguments. You read well-meaning pieces telling you how your credit is gonna be screwed for at least seven years if you don’t pay this bill NOW. Even though you’re avoiding the phone, you still see the caller I.D. You know exactly who’s calling, and the pit in your stomach grows bigger and bigger.

One night I came to a realization. I couldn’t sleep, so I’d grabbed a beer and a movie and was sitting staring at the screen. It hit me.

I was screwed anyway, so why was I sitting awake, worried about debt collectors? I’d never kill the fire unless I started walking toward the actual furnace.

That day I forgot about the debt collectors. I actually laughed at one guy when he threatened me. Do you know how empowering that is? At the time, I think he thought I was some deadbeat nutjob. But once I realized that he couldn’t hurt me, I became stronger.

My New Debt Payment Plan:

1)      We set up automatic savings. From then onward, whenever money came in ¾ went to debt and ¼ went to build a reserve.

2)      I scheduled financial meetings with Cheryl so we were on the same page (at the time she paid the bills and I took care of the debt repayment people…for the first time we were doing it all together).

3)      Instead of solving every fire by throwing cash at it, we started to get creative. Our weekends were spent going to garage sales for school clothes for the kids. Pot luck game nights at our house became a boon (people would all bring over food and nobody would take it home…we’d eat other people’s leftovers for a good part of the week).

4)      When things broke I learned to fix them myself. I’m an oil change and vacuum cleaner repair expert.

Maybe they didn't all look great, but I saved a ton of money!
Maybe they didn’t all look great, but I saved a ton of money!

5)      I began bringing work home to cut down on daycare bills. Sure, it took me longer to get stuff done with twin five year olds running around, but I adopted the motto that I can “sleep when I’m dead.”

Every dollar we came in under our original “budget” went to debt. It didn’t matter that our budget wasn’t balancing. I could starve a little today. I didn’t want to live this way forever.

I can definitively point to that day as the time when things turned around for me. Did things get better right away? Ha! Of course not! They got worse, as you would expect. The second I put down the fire hose, we were consumed by the little brush fires. But I was finally moving toward the actual furnace, and was able to turn the tide much faster than if I’d just kept trying to handle all the little problems.

Photo: Official U.S. Navy Imagery

Post-Holiday Distress: Did You Spend Too Much?

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Stop. Take a deep breath. That feeling of dread? It’s just the holiday spirit leaving your body with each passing breath. It’s your own fault… everyone knows not to look at the receipts on the day after!

If you were smart, you planned ahead. You created a holiday account at the beginning of the year so by the time November rolled around, you had cash on hand for cherry-picking the best deals.

If you were smart, you stuck to your budget and didn’t let stress, competition, irresistible deals, or last-minute price hikes to knock you off your plan. You made a list of people and charities you wanted to recognize, set a price per gift, stuck to your list, and got your shopping done early.

That’s if you were smart.

But if your candy cane and cookie euphoria is dissipating with every thought of your credit card statement, you’re not alone. It’s engrained in our culture: Thanksgiving is to overeating as Christmas is to overspending – lavish spending you’d never consider otherwise.

The pressure to GIVE is powerful; our senses may leave us entirely. When we shop, we anticipate the warm embrace and feeling of joy WE create when a gift is received. It’s awfully noble. But if you’re like me, today is the day you watch your kids and realize just how little use your gift will get (I will never buy a robotic pet again!).

So what’s next?

Budgets are fluid. They require constant reevaluation. If you overspent, it’s time to reconsider your budget for the coming months. You won’t be able to see any viable options without a clear picture. If you didn’t before, go back and write down what you spent.

Chances are, it’ll make you feel better. You’ll realize that, while you had a bad month for your budget, you aren’t completely out in the cold. Because, you see, most of the year… You were smart.

If you’re not feeling better, take solace knowing that it’s possible to mount a comeback.

A few years back, holiday spending tipped my credit card balances over the edge. I wasn’t smart. I thought I was – it makes sense to open up store credit cards to save 10%, right? Wrong. It wasn’t until too late that I realized I wouldn’t be able to make the minimum payments on so many cards.

I knew enough to see that with accumulating interest, everything I could afford to pay towards my various credit card bills would be going straight into the creditors’ pockets while my debt level remaind constant. Classic debt spiral.

What did I do? Consolidate. Debt consolidation sounds ominous, but it’s far worse for your credit to fall behind on payments. You can take advantage of low interest rates on balance transfers and merge your debt to one account, or seek a consolidation loan to pay off your principal balances. If you have good credit history, you may be able to achieve a lower interest payment or a longer payment period. Managable. You can handle that.

The moral of the story? I’ll say it again:

Stop. Take a breath. Enjoy what’s left of the holidays. You’ve got options.

Photo: TopGold

Thanks to Jennifer Willard for taking over the blog responsibilities today while Joe & OG search for more egg nog. Jennifer has a new blog, Crayons & Coins. She also writes for Credit Guard, a non-profit debt counseling company.

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Budget Nightmares: What Are You Doing At 2 A.M.?

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When I left The Citadel (go Bulldogs!) to attend Michigan State (go Spartans!), I said goodbye to a lucrative track and cross country scholarship. I felt bad, but the writing was on the proverbial wall. My coach had given me “one more year” to run better at the end of year one, and I promptly pulled a quadricep muscle early into the fall campaign. I’d been a guy they thought was a (quoting the coach), “Diamond in the rough” anyway. Turns out I was pretty much just rough.

Immediately, I had money problems. My parents couldn’t afford to pay for MSU. I had this general notion that financial aid would cover everything. Imagine my bitterness  when I found out that my dad made too much money to qualify for any need-based aid.  My loan package quickly swelled as my first course of action was to get through school quickly. When I realized what a mess these loans would be, I made the tough decision to become a part time student working three jobs.

Here’s how I made that decision:

During one of my money woes, I tuned in to my favorite late night money talk show hosts on the radio: a guy named Bruce Williams. He sounded like that knowledgeable grandfather who’d give you either an arm around your shoulder or a swift kick in the butt. Maybe listening to him was the idea behind our podcast….I don’t know.

One night, drowning in my own debt and hopeless money situation, I heard a woman call in to the show. She and her husband both worked hard, but they weren’t making ends meet. Bills continually piled up and their reserves dwindled.

“What are you doing at 2 a.m.?” Bruce asked.

The woman stuttered. “What do you mean? We’re sleeping!”

“Why are you sleeping at 2 a.m. when your bills are getting further and further behind?”

The woman quickly answered, “We need all the sleep we can get so we work well at our job in the morning.”

Bruce sighed. “So you’re saying you need your job worse than your house and car? Then why don’t you sell your house or car?”

“I can’t sell my house or my car. Then I wouldn’t have any place to live!”

“My point exactly,” he said. “So, if you like your house and your car, what are you doing at 2 a.m.?”

“What are you getting at? I can’t do more than I’m doing.”

The radio host laughed. He had this chuckle that always sounded a little sad. “What I’m getting at is that you have serious money problems, but you don’t want to change anything. If you’re serious about solving your money problems, you’ll get a night job too, or you’ll find ways to make more money at your day job.”

The woman quickly interjected, “We’re both at the top of our pay scale. That’s why we need to hold on to these jobs.”

“You aren’t listening,” Bruce said. It was one of the few times I’ve ever heard him turning angry on the show. “You can’t work like you do, eat like you do and sleep like you do AND expect something to change.”

Unbelievably, she ranted at him. “I can’t believe this. I call you for serious advice and all you do is blame my job, blame my house, and blame me. We’re doing everything we can do and it isn’t getting any better.”

…and she hung up on him!

Maybe she wasn’t listening, but I sure was. I became a substitute paper boy and redoubled my efforts to advertise my disc jockey service better. I went around to fraternity houses and spoke directly with the social chairmen. I made mixed tapes with some cassettes I had laying around and brought them with me (that dates me, huh? I’m glad I didn’t say reel-to-reel tapes….). Later, I found out that my tapes were a hit around the school. More than that, extra money started to trickle into my hands, and my view of my financial situation changed.

 

Here’s what I learned:

  1. I’m in charge of my financial destiny.
  2. Sleep is overrated when you’re in over your head.
  3. Financial planning is easy. It’s either an income problem or an expense problem. If you can’t fix one, you have to fix the other by default or the plan won’t work.

If you’re reading this because you’re in broke week (a term coined by my friend Michelle over at See Debt Run), you can either fix it once today and have to fix it again next month, or you can change your money earning skills or spending habits. For short term needs, you could borrow cash, but remember that this isn’t the final solution: it’s duct tape until you’re able to get on your feet.

While we’re talking about duct tape on your financial situation, how about a cool $100 cash or Amazon money? Would that help you avoid your long term plan for a few more days? Ha! Maybe you can use it to buy a radio that’ll change your life, too….

Enter our gigantic giveaway below:

a Rafflecopter giveaway

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Hoping to Stay Married? 4 Money Rules for Wedded Bliss

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No one talks about money on their wedding day, do they?

Maybe they should.

The two biggest questions I get from my newly married couples are “how do we pay all this debt off?” and “what do we do with all these accounts?”

Many people now merge their financial lives with tens of thousands of dollars in student loan debt, car loans, credit cards, mortgage(s); because of high student loan amounts, even some shockingly young people are facing piles of debt before they tie the knot.  Additionally, people are generally marrying later, which means they already have established routines and stable financial relationships – and usually many different accounts.  There are a few simple rules to consider when discussing (and planning for) debt and account management in a new marriage.

Rule #1 – You don’t automatically become responsible for your new spouse’s debt when you marry.  If it’s in their name only, unless you’ve co-signed for it, it’s their responsibility.  Many people think that once they’re married they become obligated to the new debt.  Not true.  So, the rule is this:  Don’t assign yourself to your spouse’s debts once you’re married.  There’s no reason to become a joint account holder on their mortgage or credit card account.

Rule #2 – In some states, you can be liable for debts your spouse accumulates after you’re married.  That means you need to be open and honest at all times with money.  No one likes a surprise credit report ding.

Rule #3 – New marriage equals new banking relationships and credit relationships.  It’s the cleanest way to do things.  People change banks now like they change shampoo, so this really shouldn’t be an issue – both of you can keep your own checking accounts, but create a joint one at a separate credit union or bank that you agree on and use that one for household expenses.  Same goes for credit cards.  Don’t become “joint owner” on your spouse’s credit cards unless it’s a $0 balance.

Rule #4 – One person should be named on all utility accounts. Everything shows up on your credit report now, including your utilities (I learned this the hard way).  To keep order, one person should be named on all utility accounts, i.e., electricity, water, gas, cable, phone, etc.  That way if one person has issues, it only takes one person’s credit score down and the other remains fairly clean in case you need credit in the future.

Money isn’t complicated.  It requires very little thought and discussion, but it does require some.  My overall advice is simple: be honest and up front with the debt you’re bringing to your relationship and develop a plan together to pay it off.

Photo courtesy of: photographerglen

Paying Student Loans: Learn Why to Pay Federal and Private Student Loans Faster

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The Truth about Paying Student Loans

If you are borrowing for your college education with Federal or private student loans, you have many options to handle their pay off. When applying for your loan, speak with your financial aid advisor or loan servicer for help choosing from different terms, payment schedules, deferment periods and more.

While payment plans that place a lighter load on you financially may be beneficial to you during different times in your life; there is also a huge benefit to putting in the effort and paying student loans off earlier.

3 Reasons to pay off your private and federal student loans faster

If you are debating whether to pocket your extra cash or apply it to your student loan payments, here are three reasons to go beyond your minimum payments and apply your money to the principal on student loans.

 

1.       You will pay less for school in the long run.

When you make a monthly loan payment, your money is allocated first towards student loan interest rates and fees and then towards the principal. But when you pay over the minimum amount, you can specify that the excess is applied directly to the principal balance – the total amount due for you to pay off the loan. As this number decreases, so does the amount of interest you pay on the loan. So, when you make the effort to take a larger dent out of your principal, you are significantly reducing the amount of interest you owe overall and the amount of time it will take you to pay off federal or private student loans.

 

2.       Earn interest rather than pay it on student loan interest rates

The reward for your college education is ideally the ability to secure a job and get on the road to financial stability. That being said, in the early years of employment after college, your overall personal financial obligations will likely be at their lowest level. If you make the smart decision and funnel extra income into paying student loans, you can get them paid down before things like a wedding, house and kids become the financial focus. Plus, once your debts are paid off, you can start putting your money into interest-bearing savings accounts  – helping you meet your savings goals faster. Just remember, because the student loan interest rates are often better on Federal student loans, if you have private student loans as well, you will want to pay those down first.

 

3.       There is no prepayment penalty

Thanks to the Higher Education Act of 1956, student loan lenders are unable to charge you anything at all for paying your student loans off as fast as you can. So, keep that in mind. If you can make payments now, even small ones, you’ll set yourself up for a better financial future.

 

The sooner the better when it comes to paying student loans
Getting out of debt can open you up to a world of possibility. Paying more on student loans, or even starting to pay them before graduation, gives you a head start on a secure financial future. Plus, the earlier you start showing a history of making consistent payments, the earlier you start building a positive credit history. It’s a win-win all around.

Sponsored content was created and provided by RBS Citizens Financial Group.

 

Photo credit: College Degrees 360