yuukiitoyx: Paying Private Student Loans First | Universal Finances

Most likely if you are one of the many with private student loan debt along with several government loans, it?s because your parents couldn?t take out one of those parent plus loans. Maybe they had less than adequate credit history or a recent foreclosure due to the recession. Some parents just feel like it?s the child?s responsibility to figure out their finances for school. In either case, its six months from graduation and the lenders are starting to bombard you with emails, texts, and recurring letters.

Paying Private Student Loans First

You might have every intention of paying them back, but you just cannot figure out where to start with repaying each lender.

You have done your best to save money in certain areas like eating out less, switching from unlimited cell service to prepaid cell phones for you and your partner, and even walking to places less than a mile from home. With all the budget cuts to your spending, you still find it nearly impossible to pay each student loan fully. Which student loans need to be paid each month and which can wait for later?

It is so important to pay the private student loans off first because these are private lenders will be much more aggressive with getting their payment each month. All private loans carry a variable interest rate than can always change. And while your first couple of years? payments will go to paying off the interest before principle, you have no choice but to pay these loans of prior to the federal loans.

When contacting private lenders, they are in no place to offer extended repayment plans or any type of income based repayment plans whatsoever.

According to Forbes, on average private loans have at least double the interest rate of federally-based loans. The average being at about 12% for private loans these days means the interest will always put you in the hole. While it?s aggravating to think that each month you make a payment, you might not be making any type of headway, you need to pay the payment each month.

With the recession, if you have multiple private student loans, it is nearly impossible to find any lender to do a consolidation. Even with great credit banks are refusing graduates. With any federal loan, on the other hand, graduates always have the ability to compromise with the government. There are so many possibilities from income sensitive repayments to income based repayments to extended repayment plans. It?s a good idea to ask for application for all of these options and consulting an expert to help you choose.

Oftentimes, graduates will qualify for several options at one time, and each one can result in a very different payment amount.

For those students who find some of their federal loans and private loans being managed by the same lender, (which does happen) means graduates need to keep communications vague.

Private lenders that have taken over certain government loans are often trained to find out whether you could afford to also pay all your loans at once. If a customer service rep refers to your private loan when calling about your federal loan, kindly ask them to not do so. Try to maintain communication between the private and federal loans separate and confidential, so you don?t find yourself in a sticky situation.