Tips on how to pay off your private education loan

Finance Dept.

From the Finance Research Center

Private education loans mount up fast and before you know it, you can owe thousands of dollars. Private education loans are different from federal loans because they are issued by private banks and other various lending institutions.

There are several tips that can help when you want to pay off your private education loans. First, take time to create a plan. This should be done before you graduate—preferably several years in advance. Plan on when you will pay off your loan.

Develop a savings plan. During the summer get a job and try to save at least half of the money you receive. Speak with a financial advisor at your local bank and seek a high return on the money you invest.

Think about getting a work-study job. This will help pay for the high costs of college. This can be achieved by going to you campus employee office and asking about their work-study programs. Work study jobs usually pay the minimum wage and can help pay off your student loan.

Next, apply for grants. Take time to apply for several grants and scholarships. In addition, there are several federal grants that can be quite helpful such as the Federal Pell Grant and the Leveraging Educational Assistance Partnership Grant.

Look into programs such as the “exchange work to reduce debt” program. There are volunteer and work programs such as teaching, legal and medical programs that can be exchanged to help reduce the debt on your loan.

Be sure to use any extra cash you might have from your paycheck to add to your loan payments. This will lessen the amount of interest you will pay and that can add up to substantial savings.

Then, there is consolidation. Consolidation is a method where you combine more than one federal loan into one. When this is put in motion, it can sometimes lower your interest costs. Especially if some of your loans have a variable rate.

Jobs that help you pay back student loans can be found in the following areas: teaching, law, public service and dentistry and medicine.

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