A new semester’s just started — for you lucky seniors, it’s your last semester of college. But just beyond your graduation date, the shadow of student debts loom. That doesn’t mean you should resign yourselves to living with student loans hanging over your heads.
Making smart financial planning and money moves now can go a long way in building a secure foundation for the rest of your lives. To get ready for the real world, here’s what you should do with your finances in your last semester of college.
To-do list for your last semester of college
1. Calculate your student loan payments
In your last semester of college, take advantage of on-campus resources that can prepare you to tackle student loans. “Exit loan counseling is also a great way for them to speak with a professional about their specific situation and make a solid plan on how to pay off their debt in a timely manner,” says Valerie Streif, a senior advisor with The Mentat, a career services provider.
Most student loans have a six-month grace period from your graduation date. Still, “it is very advantageous to know how much those payments will be before that time arrives,” says Amber Berry, a certified financial planner and founder of Feel Good Finances. “If there are multiple loans, understanding the repayment details is even more important.”
Determine what your student loan balance is, and then enter your information into the Student Loan Hero payment calculator. You’ll be able to see how that translates into a monthly payment. The average monthly payment is $351 (ages 20-30). You can typically expect to pay $100-120 a month for every $10,000 in student debt.
Student Loan Payment Calculator
Find out expected monthly payments on a loan.
2. Learn about student loan repayment options
If you have difficulty keeping up with a standard payment plan, alternate student loan repayment plans can help. Get informed now on how to enroll in these programs, their benefits, and their drawbacks.
“Choosing the wrong repayment option could leave [you] cash-strapped for many years after graduation,” says Jim Slowik, a senior college funding consultant with My College Planning Team. Arm yourself with knowledge now; it will help you keep a cool head and make a smart choice if you’re in a tough spot.
3. Pay off non-educational debts
Along with planning your student loan repayment, you need to tackle other debts — especially high-interest debts like credit cards.
“Pay off any credit card debt (stop charging beer and pizza to the card RIGHT NOW) and focus on car payments or other expenses,” Streif says. This will “eliminate that drain on their account so their first job can go towards loans.”
4. Plan for remaining college costs
As you’re planning out your finances through graduation and beyond, budget to cover all of your college expenses. “Watch out for hidden costs of graduation,” Berry warns. “Some universities make students pay for the cap and gown, which can cost $70 or more.”
It’s important to graduate with your college accounts settled. “If there are any outstanding fees owed to the school, don’t be surprised if they put a hold on transcripts until fees are paid,” Berry says.
5. Project post-college expenses
The last semester of college is also when you should look at the living expenses you can expect to face after college. “Most students are aware of the increased expenses after graduation,” says Tyler McIntyre, co-founder of startup financier CLEAR Bank. And yet, “When students get their first paycheck it will come as a shock to see how fast it disappears.”
Figure out how much you should budget for expenses like health and car insurance, rent, groceries, utility bills, cell phone, internet service and more. If you’ve had help from parents covering these expenses, start a discussion on how those costs will be covered post-graduation.
6. Overhaul your resume and job search skills
Securing a job is key to covering bills. The first step is to polish your career skills and make yourself a marketable candidate for your first job after college.
“Take advantage of free career development resources on campus,” Berry recommends. “Career fairs, resume and cover letter help, mock interviews, and informational workshops to prepare for the job market.”
7. Put job applications on full blast
Once you’ve revamped your resume, start your job search and send it out to hiring companies. “Having interviews lined up and even offers on the table is one of the best ways to transition into a paycheck so that they can start paying off their loans immediately,” Streif says.
Eight in 10 graduates from the class of 2016 had a job lined up, according to the 2016 Student Insight Survey from AfterCollege. It’s an encouraging trend that hopefully indicates the class of 2017 can expect a fruitful job search.
8. Build a savings fund
You might not find a full-time job right away, however, or you could need cash to cover upfront costs like a deposit on an apartment. “The extra money from this savings can support them during this time,” Berry says. “This is especially true for individuals who will not be financially supported by family after graduation.”
Try to limit your costs now and save as much as possible before graduation. The more you have saved, the more freedom and flexibility you’ll have to make choices based on your career and life goals — and not your wallet.
9. Find new health insurance
If you’ve had health insurance through your college, this coverage will end along with your last semester in college. Recent graduates “generally have 60 days from the time that it expires to get themselves re-insured,” Berry says.
See if you can get added to your parent’s health insurance plan or head to your state’s health insurance exchange and get shopping. You’ll get essential health coverage and avoid the no-insurance tax penalty.
10. Open a retirement account
“One of the smartest moves a college senior can make is to open a Roth IRA and begin contributing to it,” says Lyn Alden, founder of Lyn Alden Investment Strategy. Even if you contribute just $5 a month, it’ll get you in the habit of regularly adding to your nest egg.
Every dollar you add now is worth much more than a dollar saved in your 30s, 40s or later. “By starting so young, that money will snowball over time and give them tens of thousands of extra dollars by mid-life, just from that one move,” Alden says.
11. Start building credit
A credit score “can be incredibly important for getting low rates on car loans, mortgages, getting into good apartments, and qualifying for high rewards cards,” Alden says. So in your last semester of college, it’s important to improve your credit score.
“If they haven’t done so yet, apply for a credit card now,” Slowik says. “Use the card regularly and make the payments on time each month.” Alden also suggests asking a parent to add you as an authorized user to an existing credit card account with a strong payment history.
You’ve worked your tail off getting through college. Putting your degree to use and making your student loans worth it will require smart financial planning — starting now. Use your last semester of college to set yourself up for lasting financial success.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
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1 Important Disclosures for SoFi.
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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.54% APR (with Auto Pay) to 7.27% 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 March 18, 2019, 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 0318/2019. 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 firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
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.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 2.5% effective February 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.54% – 7.12%3||Undergrad & Graduate|
|2.54% – 7.27%1||Undergrad & Graduate|
|2.67% – 8.96%4||Undergrad & Graduate|
|3.23% – 6.65%2||Undergrad & Graduate|
|2.69% – 7.43%5||Undergrad & Graduate|
|2.98% – 9.72%6||Undergrad & Graduate|