What can you do to stay out of student loan default? Basically, the same themes I’ve been pounding home for four chapters now apply here as well—themes such as establishing a conservative budget and living within that budget. Also, getting rid of luxury items in your budget like an expensive car or a $5,500 living room set for that new plush apartment of yours. Eating out every night won’t help, either.
Other action steps you can take include:
• Pay down your student loan debt early or pay more than you owe on your minimum monthly payments. Studies show that early payoffs help eliminate bank account–crippling interest payments for the life of the loan.
• Use the grace period to save up money for your student loan payments. The trick here is to forget that it’s a grace period. Treat it as a “loan payment” period.
• Once you make a budget, live within that budget for at least one year before making any big purchases, like a home or a car. Such purchases can leave your carefully constructed budget way out of whack.
• Hire a financial advisor to help you out. For as little as $90, you can get a professional road map to pay off your loan and live within your budget. If you can’t afford one, try contacting your local consumer credit office.
• Don’t hesitate to contact your lending institution as soon as you begin to experience problems handling your student loan. They can help with payment plans and offer some new financing options.
• Make sure you keep all your paperwork. Keep copies of all documents, canceled checks, and every piece of paper you sign your name to.
• Keep your lending institution posted on your whereabouts. Let them know when you have a change of address or phone number, or if you change schools or change your enrollment status.
• Get help as soon as possible if you have any difficulty maintaining your student loan repayment arrangement.
• Keep your credit card in a desk drawer and out of your wallet. Credit card debt can really hamper your debt repayment efforts.
• Above all, come hell or high water, be sure you make loan payments on time.