Say "Hello" to Student Loans!
The time has come! You’ve finally graduated and you’re ready to take on the real world. But along with this sense of accomplishment comes a little feeling of dread. You know what I’m talking about: the dread of paying off your student loans.
If you are graduating from college with a lot of student loans, you’re not alone. A 2012 study by the Federal Reserve Bank of New York shows that from 2005 to 2012, the amount of student borrowers increased by 66%. The study also showed that the average student loan balance is now $24,803. That’s a lot of money to pay off. How do you even get started?! First of all, take a deep breath. No need to panic.
We’ve put together a list of tips to help you take control of this process and manage your debt:
1. Know your loans
All loans are not the same. Know what kind of loans you have and what the terms are. That includes keeping track of your lender, balance, and repayment status. It’s also important to know your loan’s grace period. The grace period is how long you have after you graduate or stop attending school until your first payment is due. Generally speaking this is around 6 months but not always. You don’t want to be caught off guard before you have time to plan. If you can’t find some of this information, just contact your lender or even your school—they’ll get you moving in the right direction.
2. Choose the repayment plan for YOU
There are many different repayment plans to choose from with different schedules. It’s important to find the right balance for your life—a balance between paying off your loan quickly and making sure you can still live your life. Many plans have you paying off your loans in about 10 years but you may be able to extend this further to 20 years or more if the monthly payments are out of your reach. But as a rule of thumb, when you pay longer, you’ll pay more. Even though the monthly payments are smaller, the interest adds up over time. However, in the end, it’s all about deciding what is right for YOU.
3. Keep in contact with your lender
Make sure your lender knows your current address and telephone number. If your lender needs to contact you and they are unable to, it could really cost you.
4. Make it automatic
If you’re nervous about missing payments, an option to consider is having your loan payments automatically deducted from your bank account. It’s an easy way to ensure you make your payments on time. Some lenders even offer lower interest rates if you make on-time payments through their automatic debit plans so it’s worth looking into. If that’s not an option, make calendar alerts on your phone or use a tracking tool—anything that will keep you on-track with your payments.
5. Budget, budget, budget
You’ve heard it a million times already, but it really is important to make yourself a budget and stick to it. There are a lot of new expenses to consider as you enter the real world and student loan payments are a big one.
6. Check out loan forgiveness
Some career paths offer full or partial student loan forgiveness. For example, many government and nonprofit organizations offer this along with some teaching jobs in lower-income areas. Peace Corp and AmeriCorp positions are also eligible for some loan forgiveness. Check it out if you think you might qualify—it could save you a lot of money.
Written by Katie Switzer
This blog post is from the Author's perspective and doesn't speak for brightpeak financial. Contact brightpeak if you want to know more about brightpeak products, and keep in mind that they are not available in all states and there are some limitations (some exclusions and restrictions may apply).