Time flies by so quickly! Just a few months ago you were
attending your college graduation, and now the time has come to start repaying
your student loans.
When scholarships or a part-time job just isn’t enough to cover
the cost of tuition, you may have to resort to assistance in the form of loans.
Student loans can be tricky, especially if you don’t know the facts behind
Here are a few things that you should know when it comes to paying
off your student loans.
- Student loan interest is tax deductible. If
you paid student loan interest on a qualifying loan last year, meet certain
income requirements, attended an eligible institution as at least a half-time
student, and started paying on your loans within a reasonable timeframe after
the loan was taken out, you may qualify for the student loan interest deduction.
You can deduct up to $2,500 in loan interest on your taxes if the above
conditions are met, as outlined on the IRS website.
- Direct debit lowers the interest rate. Automatically
having your student loan payments deducted from your bank account lowers your
interest rate and saves you from having to worry about making your payment on
time every month.
- Loan payments can be deferred under certain
conditions. Deferment is when you delay your student loans and can apply in
certain situations, including furthering your education or if you are an active
military member during a global or national emergency. To request a deferment, you have to contact
your lender directly.
- Lenders will often lower payments if you
are facing financial hardship. If deferment is not an option for you,
lenders may offer you forbearance, allowing you to stop or lower your loan
payments for 12 months while still accruing interest. See
if you are eligible for this option.
- Teachers are often exempt from repaying
their loans through a specific program. The Teacher Loan Forgiveness
Program allows teachers who work 5 years in schools in low-income areas to be
forgiven for up to $17,500 of their student loans. This only applies to Direct
Subsidized and Unsubsidized loans as well as Subsidized and Unsubsidized
Federal Stafford loans. PLUS loans are not eligible. To see if you qualify,
check out the Federal
Student Aid website.
Student loans are not as bad as you think. Having student loans in your name and
making your payments on time shows that you can handle a large amount of debt
responsibly. Over time, your on-time payments will contribute to your credit
score – building to your payment history, total amounts owed, and credit
So when you eventually purchase your first post-college car
or residence, you won’t be looked over due to your ability to manage your payments
wisely. Keep in mind that you never want to be late on a payment or default on
a loan as this can completely ruin your credit score and may be hard to recover
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