Graduating from college can be a bittersweet moment for some adults as they get the sudden realization they'll have to start making payments on their deferred student loans.
With some individual debt amounts reaching into the tens of thousands of dollars, it is not surprising if the prospect of tackling such a large number seems daunting - especially if you haven't secured a full-time job yet.
Luckily, federal student loans and some private lenders offer a grace period following graduation to give you some time to get on your feet. This is a great time to employ some strategies for how you're going to pay off your debt.
Here are seven tips to get you started:
- Know your loan information. When you're about to finish college, you're required to partake in exit counseling for federal student loans. This training session lets you know how much you'll owe and some options for repayment. It also includes a calculator for determining your monthly payments under different plans. Make sure you know how much you owe and what your bills will look like once it's time to start repaying.
- Create a budget. With your loan details handy, get to work on a budget for life after college. If you don't have a full-time job already, you can check salary information online to determine the average starting pay rate for your field. Determine how much of your income will go to your loan payments each month and see where you'll have to make sacrifices.
- Set up income-based payments. This is one type of repayment plan that is tied to how much you earn. It keeps your payments within a reasonable figure so you're not struggling each month.
- Start paying early. Although deferment and grace periods are a relief, consider making your first payments before these periods are over. This reduces the amount of interest you pay over the life of the loan.
- Set up automatic payments. This step can not only help you make sure you're current on your payments, but it may also earn you a discount. Some lenders may be willing to lower your interest rate if you have automatic payments.
- Make bi-monthly payments. If possible, cut your lender a check twice a month to pay off your debt faster.
- Save money. Practice smart spending habits to keep more money in your checking account at the end of the month after paying your bills. This will leave more breathing room in your budget.
For more information about smart ways to manage your finances, contact Landmark Bank.
Back to Blog