Student loans come in handy in the course of our university or college years. However, the joy of graduating is cut short when you realize that you are now a couple of thousands of shillings worth of debt. Student debt is not the easiest thing to pay back – University Loans: How HELB Is Locking Young People Into A Cycle Of Poverty. You are fresh out of college, trying to get on your feet probably on your first job and now you have to think about the loan you owe. There is nothing one can do to evade the loans. However, you can always make the process of paying a little more bearable. Here are some tips that can help you work your way through your debt.
Create a Payment Plan
The first thing you have to do is figure out how much you owe including interest. Once that is done, create a financial plan which will be determined by how much you can pay monthly. Most lending institutions give you a grace period of 1 year or more after graduation to start repaying your loan. You can take that time to work out a solid plan. Once you break down the total into smaller payments, the amount will not seem so daunting. Avoid burying your head in sand and pretending the debt does not exist. When your lender comes for you, and they will, they will set the terms of payment and that may hurt you more.
Pay more when you can
Once you start the repayment process, you are required to pay the fee agreed upon on a regular basis. However, if you are having a good financial month, you can pay more than the monthly fee. This will go a long way in reducing your balance. Always make sure that your payments are on time. This way you do not incur any penalties. These additional unplanned payments only make the burden of paying the loan heavier. You can find yourself stuck in a cycle of debt for many years.
Take advantage of waivers
One of the biggest challenges people face when paying loans is the looming threat of penalties. You incur penalties when you are late to pay your monthly payments. Sometimes, it does not matter how loyal you are. You can be strapped for cash due to an emergency or you could lose your job. So over time may incur a penalty bill larger than your initial loan. This is where you take advantage of waivers.
For example HELB, sometimes have a grace period once a year where they give loan applicants a 100% waiver of their penalties. Last year, they did this between May and June. That can cut your bill by half. So keep yourself in the know about these things.
Create a loan repayment fund
When we receive money, we often take care of our immediate basic needs then cater to the other needs last. So the chances of putting your loan repayments in the back burner are high. You can create a savings account that you can not easily access or withdraw from. This makes you forcefully save money whether you want to that month or not. Look into savings accounts which will have the maximum yield in terms of interest. You can also work with your employee for loan repayment assistance. Thus you receive your salary minus your monthly payment. You have no control of whether you pay it or not.
Supplement your income
Your basic income might not be enough to cater to your needs and monthly instalments. Invest in a side job that can bring a little more money into your account. You can devote the income from the side gig to cater to your loan so you can pay it quickly. On the bright side, you get to keep the income generated later on after you finish paying off your debt. How To Start A Side Hustle