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Steps for Paying off Student Loan Debt

Paying off student loans might seem impossible when there are other financial obligations to worry about in life. However, paying off student debt is achievable, it just takes some planning and time to get there.

Follow these 4 steps to get on track to being student loan debt free:

1. Don't rush paying off student loan debt. Before you pay off any debt make sure you first have an emergency fund that can at least cover three to six months of rent. You don't want to not be able to afford your home on top of having student loan debt. Also start putting some extra money into a retirement fund, sometimes your employers will match what you put into that fund.

2. Choose a strategy of paying off your student loan debt. You want to come up with a plan that will help make your payments, and clear your debt in the most effective and efficient way. It is suggested to pay down the loan with the highest interest rate first in order to get out of debt faster. For example, pay off expensive unsubsidized loans first because they carry the most interest, then focus on repaying subsidized loans that have lower rates.

Private loans should be paid off before federal loans, because federal loans usually carry more protections for the borrower, such as, loan forgiveness and income-based repayment for borrowers who qualify.

3. Communicate your strategy to loan companies. You need to make sure that when you send extra payments they are aware of where you want to the payments to go toward. Call your servicer before you make extra payments so that they know exactly how your money should be applied toward your debt.

Online systems may allow you to specify where the extra payments should go. If you pay with a check, attach a cover letter specifying how the extra payment should be applied. The Consumer Financial Protection Bureau has a sample letter available on their website.

When submitting extra payments make sure you include as much information as possible: full name, SSN, birthday, general account number, and the identification number of the loan being repaid.

4. Make sure to get conformation of your payment going through to your servicer. Keep copies of all information and payments you send toward your servicer. After a week of sending in your payment, check the servicer's website to see if your payment went through, and after you paid in full request a "paid in full" letter to be sent to you for record keeping.

If you need extra guidance in paying back student loans, contact an attorney who is knowledgeable in student debt and can help you get back on a financially stable track.

Work Cited:

US News) http://www.usnews.com/education/best-colleges/paying-for-college/articles/2014/11/24/4-steps-for-

prepaying-student-loans-the-smart-way?page=2

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