Note that collections on all federal student loans have been suspended as part of the efforts to ease the economic impact of the coronavirus pandemic. Please visit our Student Loan Hero Coronavirus Information Center for more information.
* * *
There are many ways to set and achieve financial goals, but with so many suggestions to improve your financial life, you might be wondering where to start.
This guide can help you hone in on some important financial goals to try to hit this year. Here is a list of nine goals you might want to consider reaching, depending on your current financial situation…
If you’re getting ready to graduate from school…
If you’re out of school and have student loans…
If you’ve already paid off your student loan debt…
If you’re getting ready to graduate from school…
The end of your university years is in sight, and you’re ready to go out into the real world.
Although you might be preparing to celebrate this milestone, now’s the time to also think about your financial goals and how to prepare for success. Below are a couple of goals you can start working toward before graduation.
You might not know what your income will look like once you land your first job out of college. But you can make conservative estimates and put together a budget while you’re still used to living on a smaller amount of money.
This is especially helpful if you expect to earn a decent salary once you graduate.
By keeping your expenses low, even with your higher income, you can generate more cash flow. From there, you can choose what to do with the extra cash. You can repay your student loans faster, for example.
Student loans usually come with what is called a “grace period” (often six months) between graduation and when the loans are due. Create a plan now and know what actions you need to take to stay on track with payments before the grace period is finished.
The sooner you pick up the habit of sending in that monthly payment, the easier it will be to manage your student loan debt. What you want to try to avoid is getting used to spending your money on other things or getting into more debt.
Start paying off your student loans as soon as possible. Your future self will thank you for not letting growing interest obstruct other financial goals.
If you’re out of school and have student loans…
Your student loan debt is probably a heavy financial burden, and may cost you a significant amount of money due to the interest that grows over time.
Make one of your financial goals to pay off at least one student loan this year. And if that’s not possible, plan on making a serious dent in what you owe by taking on one of these strategies to crush your debt.
Whether it’s the debt snowball or the debt avalanche method, choose a path of repayment when tackling your federal and private student loans.
Depending on which repayment strategy you choose, you’ll aim to either pay off your student loan with the smallest balance or the one with the highest interest rate.
Making payments on time, every month should also be a part of this plan to repay your loans to keep your credit score in good standing.
And remember, your financial goals will likely change as you move from student to graduate and then into the workforce. Each new year brings an opportunity to succeed in defining your financial goals and executing them.
There are eight repayment plans available for subsidized and unsubsidized federal student loans. Do some research about what works best for you. Then, set a goal to pick a repayment plan that will help you better manage your federal student loan debt.
If that sounds too daunting at the moment, your goal could be to learn about the repayment options available and familiarize yourself with them. That way you can later decide which repayment program is right for you.
If you’re paying the minimum on your student loans, consider sticking to a financial goal of making an extra payment every month this year.
You can also increase your current payment by a set dollar amount or percentage. This can help you pay down your loans faster and save you money on interest in the process. You can estimate how much you’d save using our calculator.
If you’re considering big financial goals, here is a really big one: Pay off every last cent of your student loan debt. A few actions you could take include:
- Cut expenses and put the savings toward your debt.
- Reduce your cost of living by moving to a new location, taking on roommates or embracing a frugal lifestyle for a specific number of months or for a year.
- Earn more money at your job, work a side hustle, or seek a new position with higher pay.
Make sure the extra payments are principal-only payments on your student loans, and if you can only make a one-time extra payment, it’s better than doing nothing.
If you’ve already paid off your student loan debt…
If you’ve already repaid your student loans, congratulations, scratch that goal off your list. Here are a few more goals you can tackle instead.
Whether it’s your 401(k) or an individual retirement account, try increasing your contributions this year and putting in the maximum amount allowed.
Here’s how much you can contribute in 2020, if you’re under the age of 50, according to the IRS:
- 401(k) plans: $19,500
- Traditional and Roth IRAs: $6,000
- SIMPLE IRAs: $13,500
Select your retirement account and divide the maximum contribution allowed by 12. This will show you how much you need to save each month to hit your future money goals.
You might also want to max out your Health Savings Account if you have one. This can be viewed as a retirement account because you can roll over the funds year to year.
If you enter retirement with money in your HSA, you can use those funds tax-free for medical expenses. You only need to contribute $3,550 in 2020 to max out an HSA, according to the Society for Human Resource Management. That breaks down to $295.83 per month.
According to the 2018 Report on the Economic Well-Being of U.S. Households from the Federal Reserve, 4 in 10 adults do not have $400 saved to cover an emergency.
For your 2020 financial goal, build financial security by adding to your emergency fund.
Your first step is deciding how much you want to keep in your emergency savings. One financial suggestion is to have access to $1,000 in savings for an emergency. Another tip is to have three to six months of living expenses stowed away in a high-yield savings account.
Divide this number by 12 to find the amount you need to save each month to reach your new-year goal. Once you have a number, set up automatic transfers to force yourself to save.
According to the U.S. Social Security Administration, the age of full retirement is 67 years, even if many Americans work well beyond that figure, according to AARP. If you’re already on track with your retirement-related financial goals, look at the years between now and the age you plan on retiring.
You’ll likely want to do a lot of big things with your life before you reach retirement. So, in addition to saving in a 401(k), make sure you’re also investing in accounts you can withdraw from before retirement.
Consider opening a brokerage account and contributing to it regularly. Doing so allows you to build wealth you can use throughout your life, not just when you retire.
Maya Dollarhide contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2021!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 5.99%1||Undergrad & Graduate|
|1.99% – 5.64%2||Undergrad & Graduate|
|1.99% – 6.84%3||Undergrad & Graduate|
|1.91% – 5.25%4||Undergrad & Graduate|
|2.25% – 6.53%5||Undergrad & Graduate|
|2.17% – 4.47%6||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of Feburary 1, 2021.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 2.98% APR (with Auto Pay) to 5.49% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.34% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of October 26, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 10/26/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.15% effective Jan 1, 2021 and may increase after consummation.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 02/17/2021 student loan refinancing rates range from 1.91% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay.
5 Important Disclosures for SoFi.
6 Important Disclosures for PenFed.
Annual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.99%-5.15% APR and Variable Rates range from 2.17%-4.47% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.