According to Marketplace.org, roughly 70% of American students end up taking out loans to go to college. As colleges’ tuitions continue to grow, so does student loan debt. Learning how to deal with your student loan debt is essential when it comes to making bigger purchases in the future – like buying a home. Here are 5 tips for you as a recent college grad, so you can get a handle on those pesky student loans.
First things first, you got to start planning. How much do you make each month? What other bills do you have to pay? How much money do you spend on other activities? Getting on a budget means you stick to a certain plan so you can stay on top of all your financial problems. Radius Bank offers their clients personal financial management tools to help them start off on the right foot. Once you are able to finalize a certain budget you can then add your student loan payment into the mix, how exciting!
2. Set goals
Once you have your budget down, take a good look at the student loans in front of you. Learn the difference between your private, secured and unsecured loans and know the interest rates for each of them. For a lot of us, if you have one student loan that probably means you have another, but don’t let that discourage you. Strategically planning goals so that you can celebrate even minor pay offs can help make the process more bearable. Depending on the type of loan you have you may have years until the balance is fully due, but do you want to still be paying off your student loans when you are sending your future children off to college? If your budget allows, set goals to pay off sooner. (see #5).
3. Combine when appropriate
Let’s talk about refinancing your student loans. Although you might hear about new refinancing options on TV or in your inbox all the time, make sure to do your research before you make the decision to consolidate. Refinancing means taking your loans to a separate lender who pays them off for you. One of the benefits of refinancing means you can consolidate multiple loans into one, making payments easier to manage. The most important thing to remember is if you decide to refinance it has to be because you are getting a better rate and improving your payment terms. Radius Bank clients who are looking to refinance can follow a step-by-step guide with Credible.
4. Outline your payment schedule
Setting up your payment schedule is the next step. Knowing how much you can afford each month is different for everyone depending on your income and debt size. If possible, schedule bi-weekly payments instead of just one payment a month. Even if you spread out the money equally between the two payments, at the end of the year you will have made a full extra payment.
5. Pay more than the minimum
As you budget out what you can afford to spend each month, make sure to look into other financial sacrifices you can make in order to increase your payments even just a little bit. The tough thing about student loans is that they are growing by the month. Paying them off right away may not be feasible but knowing that your debt is increasing can help motivate you to pay more each payment.
You invested in yourself when you took the steps to go to and graduate from college. Now invest in your future and tackle your student loan debt head on!