This cartoon about the reality of student debt isn’t so much funny as sad, but it is something that cannot be ignored. When students graduate from college they will usually have a six-month grace period before they are expected to begin paying their loans back. Before repayment begins, here are five important points that should be reviewed regarding your student loans:
- Don’t ignore them, understand them. Know what is owed, the term to pay the debt back and the interest rate. Loans should be paid back over the shortest period (term) even if the payment is the highest.
- If parents co-signed or took out a PLUS loan to pay for school, the student should buy life insurance so that if they die prematurely the parents aren’t on the hook for the student loan debts.
- Borrowers can’t claim bankruptcy to get out of student debt; only death and disability work, neither being a better option than paying the debt back.
- Try and refinance to get lower rates, but watch out for origination fees and prepayment penalties.
- Variable loan rates are nice now, but they won’t be if interest rates move up quickly. While this isn’t expected it would be prudent to pay these off as quickly as possible.
If you haven’t recently reviewed your student loans you should contact your CERTIFIED FINANCIAL PLANNER™ Practitioner.
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