NEW YORK, NY--(Marketwired - Jul 18, 2014) - MyRatePlan.com, a leading credit comparison site, announced some of the best ways to reduce consumer student loan debt. Following a set of proven tips to reduce student debt will increase positive credit history and allow consumers to save money towards paying down other debts or retirement. Student debt typically has some unique characteristics outside other forms of consumer debt such as credit cards. The loans typically have a grace period of at least 6 months and repayment is based on a fixed rate. MyRatePlan has developed a list of tips to improve credit and reduce student loan debt in an efficient way.
Consolidate and automate payments
Consolidating student loan debt can reduce the interest rate by a few points. There have been several recent rate reductions in student loans that can save a considerable amount of money over time. Creditworthy borrowers can also consolidate their private student loans if they were under a co-signer to a much lower interest rate. The biggest benefit of loan consolidation is the simplification of payments into one single payment. Borrowers will need to be aware of the repayment period and how much potential interest is paid in order to effectively pay off student loan debt with consolidation plans.
Enrolling in an automatic payment plan in addition to the consolidation plan can drastically reduce the confusion over payments and possibly save a considerable amount of money. The auto-enrollment programs will automatically draft each monthly payment from a bank account. This is great for individuals who have difficulty keeping track of payments or want a streamlined process for managing a monthly budget. Many loan programs offer a small discount on this enrollment in the form of interest rate reduction. This small reduction can add up over time to a large reduction in interest payments.
Pay interest while in school
There are two categories of student loans. The subsidized student loan has interest payments made on behalf of the student while in school by the federal government and the unsubsidized loan charges interest while in school. Paying on at least the interest payments while in school during the grace period of an unsubsidized loan will reduce the compounding of the final loan cost later. This can save thousands of dollars over the course of the loan. Simultaneously paying small amounts on the principal of a subsidized loan can also dramatically reduce the cost of the loan over the course of several years.
Enroll in forgiveness programs
There are several programs available that allow federal student loans to be forgiven after a specific period of time. The Public Student Loan Forgiveness Program allows forgiveness of debt in a public service position after 120 on-time payments toward the loan. Public service positions include teaching in high-risk populations and various state, federal, and local nonprofit entities. Additional types of employment include public health organizations and military service.
An additional benefit of enrolling in this program is the genuine experience gained from a challenging job and dedicated timely payments for a positive credit report.
Develop a budget early
Developing a budget is probably the most important tool to have when paying off student loans. Early budgeting can include determining the type of loan to get and developing a plan for future payments while in school. Most exit consultations for federal student loans offer a glimpse into how consumer payment plans will be structured. Students can gain access to this information by using online payment calculators to determine cost of living to student debt ratios.
For more information about student finances and student credit cards, access MyRatePlan: http://compare.myrateplan.com/credit-cards/compare/compare-student-credit-cards
MyRatePlan.com is a leading comparison site that allows users to compare credit cards, mobile phones, cell phone plans, and more. MyRatePlan was founded in 1999 to help users find the best recommendations for them based on innovative and proprietary tools and customer input.
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