Many recent law school graduates find themselves facing huge private student
loan payments; but are simply unable to find jobs paying enough to cover the
costs. Unlike federal student
loans, private loans usually have a higher interest rate and fewer affordable
repayment options. But there are
some things recent law school graduates can do to ease their repayment burden:
1.
Consider consolidation. If your credit score has increased significantly since you
took out the student loans, you may be able to consolidate your private student
loans and get a lower interest rate. Consolidating your private student loans
allows you more time to repay them while lowering your monthly payments. But be cautious, this will cost you
more money in the long-term.
2. Pay
off your private student loans first.
Since private student loans usually have a higher interest rate and less
repayment options than government student loans, it is wise to pay them off
first.
3. Pay
more than the minimum and begin paying off your student loans immediately. A little extra every month will go a
long way to reducing the principal on your student loan. When you pay your student loan every
month, write two checks. One will
be your minimum payment and the other check will be the extra amount of money
your want to pay, on this second check write "apply to the principal"
in the memo area. Doing this will let them know that you want to pay down the
principal of the loan and doing so will reduce your interest over the life of
the loan.
4.
For those of you who are unable to make your minimum student
loan payments, consider paying something on the interest at least. Even if you have a deferment, the
interest on the loan continues to accrue and with many private student loans
that interest is capitalized if it's unpaid, meaning your interest becomes part
of the principal. Once the interest become part of the principal, you will be
required to pay interest on it, which could cause your loan to grow to
astronomical amounts over time.