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There’s no way to sugarcoat it: Student loan debt is stressful and can force you to put your life goals on hold. It might become an issue in your 30s if it causes you to put off getting married, buying a home, or having kids.
Having student debt can be disheartening, but if you’re saddled with it after you hit the big 3-0, don’t give up hope.
“It’s not ideal to be paying back student loans in your 30s, but it’s certainly not a problem,” said Kerri Moriarty, a financial expert who spent five years on the founding team of Cinch Financial, a startup aimed at helping people manage their money. “You can’t help how much debt you have and how much money you have to pay it back.”
The key is to make a plan so debt doesn’t prevent you from moving forward with your goals. If you’re not sure how to start, we talked with some experts to create a four-step plan.
1. Compile a list of your debt
It might be tempting to stick with the payment plan you’ve been on since you graduated and avoid thinking about your debt, especially if it’s a source of frustration. But you should check in with your debt. Doing so could give you a look at how much longer you might be making payments and whether you have better options for repayment.
“Don’t ignore it,” Moriarty said. “Know your interest rates, know your balances, and, most importantly, know your payoff timelines.”
Make a list of the student debt you have, including the lenders, interest rates, and payoff dates. You can use the National Student Loan Data System, a database managed by the U.S. Department of Education, to find your outstanding federal student loan balances. Your credit report, which you can obtain once per year at no cost from AnnualCreditReport.com, can reveal which private lenders you owe money to.
2. Make a list of your financial goals
Student loan debt may not be the only debt you have, and paying it off may not be your only goal. To decide whether you should prioritize paying off debt or doing other things with your hard-earned cash, list the financial goals you hope to accomplish. But remember: You don’t have to focus on one goal at a time.
“Don’t feel like having student loan debt completely prohibits you from combining finances with your partner or buying a home,” Moriarty said. “Just make sure it’s on everyone’s radar.” She advised talking about money with your partner and deciding how you’ll share your debt burden if you move in together or get married.
Moriarty also said it often makes sense to pay off other debt, such as credit cards, before putting extra money toward your student loans. That’s because student loans could have lower interest rates. “Pay down your highest-interest debt first, which saves you a significant amount over the long term and gets you out of debt faster,” she said.
While you may be worried about having lingering debt in your 30s, it could be smart to decide against paying off your student loans early. You may decide that saving for a home down payment or putting money toward your retirement fund is more important than making extra payments on your debt.
3. Create a budget with your goals in mind
Once you have a clear idea of what your goals are, it’s time to divvy up your earnings. “The best thing you can do is give every dollar a job using zero-based budgeting,” said Christian Stewart, founder and financial coach at Do Better Financial. “Managed money goes farther, and you get to tell your money what to do instead of wondering where it went.”
Build your goals from the previous step into your budget. You might choose to save 10% of your income for retirement or set aside a fixed amount of money to buy a home in two years. That will help you see how much cash you have available for each of your priorities.
Doug Keller, a personal finance expert at Peak Personal Finance, recommended making automatic transfers if you’re struggling to stick to your budget. Even $50 or $100 transferred into savings each month could grow into a sizable amount over time. You can put that money toward loan repayment or other goals later.
If you decide not to be aggressive in repaying your student loans, you might choose a repayment plan with lower payments or consolidate your student loans. Depending on the types of loans you have, you could have a lot of flexibility in repayment.
“Thoroughly research your repayment options,” Stewart suggested. “From Income-Based Repayment (IBR) to consolidation or forgiveness, there are quite a few ways to make payments more manageable.”
Stewart pointed out that there can be downsides to programs such as IBR that cap your payments at a portion of your discretionary income. You may pay more in interest over time, remain in debt for decades, and owe taxes on any forgiven amount. Meanwhile, if you refinance your federal student loans, you could lose certain borrower protections.
Still, the trade-offs may be worth it to free up money for other goals.
4. Put your plan into action
Finally, it’s time to execute your action plan by living on your budget, making loan payments according to your payment plan, and allocating money toward your goals.
Doing so takes discipline, as managing money can be hard. “Living above your means is a common mistake people make as they get older, even without student loans to repay,” said Keller. If you can avoid this hurdle and find a way to put money toward your goals while repaying your student debt, you’ll feel better about owing money in your 30s.
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