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Introduction to Post Graduate Finances
As the elation and excitement of graduations fades away, the urgency of knowing its time to enter the “real world” begins to sink in. “What do I do next?” is the mind boggling question a lot of new grads have to be begin searching the universe to answer. Often times, while still in mid-thought a NOTICE OF REPAYMENT somehow finds its way into the mailbox. That is when it becomes clear that all those nice people who lent money the past few years actually want to be paid back! While figuring out the purpose of life or finding that dream job might cause a headache from the mere thought of it, paying back your school loans does not have to be a painful experience. These four simple steps will help you take control of your school debt. First, determine who and how much. Second, consider consolidating. Next, look into loan forgiveness options and payment options. Finally, there is the option of delaying your payment if need be.
KNOW WHO YOU OWE
The first step in this process is probably the easiest. Chances are, if you owe someone and its time to start paying back, then they will find you. If you were the responsible student that I know you were, then you should have copies of all the promissory notes that you have signed over the years. They would have it all spelled out in black and white how much you owe. If not, then your university should have it on file. In the event that you attend Tennessee State University and you don’t want to waste your time in the records office, you can pull your credit report from one of the credit bureaus and it should be listed there.
Since there are several types of loans available for students to take advantage of such as Staffords, Perkins, Heal and Plus, most graduates have taken out loans from numerous lenders. This means that you will be repaying a bunch of different loans with different interest rates back to different people. Instead of going through this hassle, you can solicit a third party company to consolidate your loans for you. In other words, they will combine all of your little loans into one big loan from one source. Aside from the obvious advantage of writing one check each month, you can also lock in at one interest rate, and possible lower monthly payments.
A clever way to deal with a portion or all of your loans is to get rid of them. This can be done by participated in a loan forgiveness program. Since teachers are in high demand right now, signing up to teach full time in designated areas can result in your loans being completely erased. If teaching isn’t your thing, other avenues such as the United States Military, Americorps, and Volunteers in Service to America have similar offers. However, if you decide to pursue this option, it is important to make sure that you are sure of the requirement to fulfill your end of the deal. Money can and probably will be withheld if you go into default of the agreement.
NEGOTIATE YOUR PAYMENTS
After all of this has been thought through, it is time to fork over the deneros. But wait! If you do not like the figure that is listed on your bill every month, it is possible to negotiate with your creditors. There are four standard ways of repaying your loan. They include the standard, graduate, income-based, and learn payment plan. The standard payment is the quickest way to pay back your loans. The monthly bill may be higher but you will pay off your debt in about ten years and you will have the best interest. The next payment option is the graduate payment. This payment plan is if for those who want to start out making light payments and over time they grow. The concept is that longer you are out of college the more time you have had to land a good paying job. It could take anywhere from ten to thirty years to pay back this way. Another alternative for repayment is the income-based payment plan. This is ideal for those who get paid off of commission or only work seasonally. This is good because no matter what your pay check looks like, you will always be able to afford your loan payments. You are given up to fifteen years to pay back your loans using the income based payment. Finally, the last option you have available to you is the long term payment. Under this plan you are able to pay the smallest possible amount. However, paying less is not always the best move. It might feel good to your pockets now but, in the long run you will be paying more money in interest. By the time the 30 years is up that it will take you to pay back your loan, you will have paid back double the original amount of your loan.
After going through all of these steps and you still feel as though you can not make payments, you still have other options such as applying for a deferment or forbearance. If you have a deferment, that means that you do not have to make payments for an approved period of time. There are three basic kinds of deferments. The first one is an in school deferment. If at any point after graduation, you decide to continue your education and re enter school you can cease payment on your loans without any penalty or added interest. You must be enrolled in school at least part time. The second kind of deferment is the unemployment deferment. If you can not seem to find a job post graduation and are having problems paying, you can apply for this deferment every year for up to three years. The last type of deferment is the economic hardship deferment. A borrower can apply for this deferment if they do not qualify for the first two and their income is less than the low standard of living which is set by the Bureau of Labor Statistics. Forbearance allows a student to make payments lower than the normal payment agreement. For a temporary period of time a borrower can pay on their interest accrued instead of the actual loan.
After you have figured out the whole loan repayment thing you can then decide what you like to do with the money that you have left over. A few very good options to consider are investing and saving.
Stocks represent ownership shares in a publicly traded company. When you buy shares of a stock, you own a part of the company. As a shareholder, your investment will rise or fall with the price of the stock. Your investment may also appreciate over time as the value of a company appreciates or depreciates as the value of the company decreases. There is abundance of information that is gathered from Bank of America about stocks. This is one of the most basic investments that can be made by a new student to the work force. Although this is the most basic it is also the most risky, this means that at any point your investments may increase or decrease.
For less risky options when it comes to investing are bonds and mutual funds. Bonds are essentially "IOUs" for money loaned by an investor to the bond's issuer. In return for the use of that money, the investor typically receives regular interest income along with the promise that the loan will be repaid at a designated "maturity" date. There are many types of bonds - corporate, government, municipal, etc. - each bringing different benefits, risks, and tax considerations to an investor's portfolio.
Mutual funds are a part of many diversified portfolios. Yet with thousands of different funds to choose from, finding the appropriate ones for your needs requires solid research and a thorough understanding of the industry. Our Financial Advisors have the experience and resources to help you make mutual funds a part of your investment portfolio.*
For the total squeamish who do not want to risk losing any money, there is always the savings account. It is important to shop around for the perfect bank or institution that will be accommodating. Different places offer different interest rates, penalties for early withdrawal, and privileges.
Once you have looked into all of these options and they all still seem very confusing you and can seek the help of a Financial Advisors. They can guide you through the process of deciding how stocks, bonds, and mutal funds may fit into your portfolio.