Congratulations on graduating! **(let the sarcasm drip off your tongue)** I know you’re probably scared AF about how you’re going to pay off all that student debt so quickly. It’s a lot, but it’s doable, and once you figure out how to make a budget, you’ll be able to prioritize your monthly payments.
If it seems overwhelming, don’t panic. Here are some tips that can help you manage student loans after graduation:
1. Make an honest budget
Now that you’ve got a list of all your expenses and income, it’s time to figure out how to make the most of what you have. First off, take a look at the difference between the two. Are you spending less than you make? If so, great! Keep up with that trend.
Do you need to cut back on some of your expenses? Maybe it’s time for an apartment with less space or a lower rent rate (if possible). Or maybe it’s time for more efficient transportation methods—subway instead of taxi or carpooling instead of driving solo (if possible).
Alternatively, if you’re finding that there’s always not quite enough money at the end of each month, then maybe it’s time to start looking into extra payments on student loans. While paying down debt may seem daunting—and while there are plenty of people out there who will tell you that credit card debt is better than student loan debt—in reality both types will suck up all your money if left unchecked . . . which means both should be paid off ASAP!
2. Make extra payments whenever you can
Now that you’ve got a handle on what your student debt is, it’s time to put together a plan for how you’ll pay it off. You can start by making extra payments whenever you have the money. This is an easy way to shave years off the life of your loan and save big bucks in interest charges (which we’ll discuss later).
You’ll also want to make sure that you’re getting the most bang for your buck when spending money—paying bills online, shopping with cashback apps like Swagbucks, using coupons/rebates/discounts when possible…all these things add up! And if there’s one thing we’ve learned from living paycheck-to-paycheck: every dollar counts!
So while looking at options like refinancing or consolidating may be tempting, keep in mind that they can come with extra fees and penalties—so only do them if they’re absolutely necessary!
3. Look into refinancing your loans
Refinancing is a process in which you take out a new loan to pay off your current student loans. The idea behind refinancing is to get lower interest rates, which can help save money on monthly payments and reduce overall debt. It’s also possible to refinance federal loans into private loans if you’re looking for a shorter repayment term than what federal repayment offers.
If you’re interested in refinancing, start by comparing your options with Credible (which provides free quotes from multiple lenders), college ave, or LendKey (which connects borrowers with partner banks that offer competitive rates).
These sites will give you an idea of what kinds of interest rates are available based on your credit score and other factors like job history and annual income. You should definitely check them out before applying for any student loan refinances so you know how much money could be saved or lost by switching providers!
4. Apply for a loan forbearance if necessary
If you can’t make your student loan payments, apply for forbearance. This is a temporary reprieve from making loan payments while you fill out the necessary paperwork to either get approved for deferment or take advantage of an income-driven repayment plan.
It’s important to note that forbearance is not automatic—you have to apply and qualify. You can apply up to 12 months at a time and must submit documentation demonstrating how your financial circumstances prevent you from meeting your payment obligations (such as proof of unemployment).
If approved, the lender will send a notice explaining how much money they expect you to pay in addition to interest accrued during the period when payments were paused. You’ll also receive instructions on what happens if interest capitalizes (gets added on) after being paid during forbearance—the lender may collect this amount plus any late fees due at this time as well!
If applying online seems like too much hassle, no worries. According to Student Loan Hero’s study on student debt management tools across platforms like Mint versus Excel spreadsheets versus Quicken/Money programs like QuickBooks Online Plus’ new features which include access mobile apps , there are plenty ways both old schoolers with pen & paper plus young ones with smartphones can manage student loans–even while still paying them off!
5. Start saving for emergencies as soon as possible
Once you’ve got your student debt situation under control, it’s time to start saving for future emergencies. Some of these might include:
- Your car breaking down and needing repairs.
- A sudden medical bill or injury that requires attention.
- The need to move out of your current apartment because your roommate is a jerk (or because they’re moving in with their boyfriend/girlfriend).
Don’t spend more than you earn and always keep an emergency fund on hand—even if it’s just $50 or $100; this will help keep yourself from getting into debt again when something unexpected happens.
If possible, try not to rely on credit cards for emergencies either; this can lead to poor spending habits and unnecessary interest payments over time. Instead, save up a few weeks’ worth of living expenses in case something goes wrong so that you have the funds ready when needed!
6. Keep in touch with your lender or servicer
- Make sure you know what your repayment options are.
- Make sure you know what your interest rates are.
- Make sure you know what your payments are.
- Make sure you know what your balance is.
If it helps, keep a list of all the key numbers associated with each loan, including the name of the lender and servicer, as well as contact information for both parties (and don’t forget to write down their websites!).
7. Know what your repayment options are
There are a few things that you need to know about your loan options before you start repaying.
- Do they offer a variety of payment plans?
- How long is the grace period?
- What is the interest rate on my loans?
It’s important to understand repayment options, because if you don’t pay attention, it can lead to financial problems down the road. You might have a lower monthly payment if your loans have an APR (annual percentage rate) as low as 1%, but some lenders may require that you set up automatic withdrawals from your bank account each month until they are paid off—which means more money out of pocket than if you were just paying them off with one lump sum.
8. Consolidate federal loans
Consolidating federal loans can lower your monthly payments. That’s because you have only one loan to repay, rather than several separate ones. Consolidation also allows you to potentially get a better interest rate on your loans or change the term of repayment on some of them, but there are eligibility requirements for those variations.
- Consolidation can be a good option if you have multiple federal loans with different interest rates (such as subsidized and unsubsidized loans).
- Consolidation can be a good option if you have federal loans with different repayment terms (for example, some were taken out before July 1, 2014, and others after that date).
- Consolidation isn’t an option for private student loans or Perkins Loans
Bottom Line
All in all, paying off your student loans doesn’t have to be the nightmare everyone makes it out to be. With careful planning and some smart choices along the way, you can actually make this happen! Just remember that every situation is different, so you should do what’s best for YOU.
