After College: Strategies for Your College Finance Plan

By: Tom Melecki

We’ve discussed why students and their families need College Finance Plans (CFPs) and summarized strategies to use in your CFP’s “Before College” and “During College” phases. Let’s review some “After College” strategies.

Almost 70% of college graduates borrow. They leave averaging more than $29,000 in student loan debt. Hence, most strive to keep their initial monthly payments as low as possible. Toward this end:

Ex-students also strive to reduce the overall amount they repay to free up money for other uses.To do this:

  • Prepay: Cut the total interest you repay by prepaying – i.e. paying early or paying extra — whenever possible.

  • Reassess Your Repayment Plan: Annually compare monthly payment amounts under your current plan to such amounts under other repayment plans. Switch plans if you can afford to pay more each month. This’ll create big savings.

  • No Negative Amortization: Some federal repayment plans allow you to pay less than the monthly interest charged on your debt. It’s better than defaulting, but you’ll pay more in the long run.

  • Use Loan Forgiveness: Washington offers some generous forgiveness plans on its loans. Pursue them if you qualify.

Being late or delinquent on your student loan payments generates extra fees and penalties. To avoid this:

  • Call Your Servicer: Ask to change your repayment plan or due date or to explore repayment deferments and forbearances if you have problems making your whole payment on time.

  • Dispute Servicer Errors: There are steps you can take if your loan servicer causes you repayment or other problems.

It’s your debt. Manage it aggressively to avoid problems and save money.

Need some personalized guidance on one or more of these strategies.Contact College Affordability Solutions for a no-charge consultation.

This article originally appeared on www.collegeafford.com


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Dr. Tom Melecki is the founder of College Affordability Solutions. He created it in 2015 after retiring from a 39 year career in postsecondary education. His work in college affordability began at The University of Texas Austin (UT), where he served for 10 years in the financial aid office, including as the director of that office during the last seven years of his postsecondary career. collegeafford.com