There’s a lot of student loan advice out there about how to properly manage your debts. How do you know what tips are most effective for you, or which ones actually work?
We reached out to professionals who all have experience with student loans and asked them to share their one best tip for new grads. Here’s the student loan advice that 12 experts feel is most important for borrowers trying to pay off student loans.
Student loan advice from experts
Know your numbers
One of the first things to do as a new grad facing student loan payments is to get organized. “Figure out exactly what student loans you have and who is servicing them,” says lawyer Adam Minsky of Boston Student Loan Lawyer.
“Make sure you know what your balances, interest rates, and monthly payments are, and when your grace period ends,” he adds. It’s all well and good to be ready to make payments on your student loans, but you must know all of these details to avoid financial trouble.
“Make sure all of your loan servicers have updated contact info for you,” warns Minsky. You don’t want any of your student loans to fall through the cracks because your servicer can’t find you.
Understand all available payment options
Part of your organizational process should also include researching and understanding your student loan repayment options.
When it comes to federal loans, “the repayment plan you choose now does not have to be the repayment plan for the entire life of the loan,” says Liz Stapleton, the finance blogger behind Friday Night Shenanigans.
“As your financial situation changes so can your repayment plan, and it can be changed up to once a year.”
Make payments as soon as possible
Just because you don’t have a bill for your student loans doesn’t mean you can’t make payments towards it.
Christie Mn, a small business owner in California, shares her best student loan advice from her own experience: “Pay off as much as you possibly can, when you can, even if it’s before you owe anything.”
Doing this helped push back her due date for 2 years, giving her the financial freedom to start her own business instead of stressing out about student loan payments.
Keep living like a student
After graduating, it’s easy to start spending more money. You need professional clothing for interviews and furniture for your new place, right? It’s tempting, but do your best to avoid lifestyle creep during the first few years after graduation.
“Keep living like a college student,” says financial coach Whitney Hansen. “Even if you get a great job right out of college, continue living on your college student budget and put all the extra income towards your debt. Your future self will thank you.”
Hunt for jobs with loan forgiveness plans
As you begin the job hunt, “research loan forgiveness plans to see if they exist in your field,” says Elizabeth Colegrove, blogger at Reluctant Landlord. If your industry does offer these types of programs, she encourages graduates to “make sure you review this when considering positions.”
You can also seek out jobs that offer loan payment plans as part of their employee benefits package. “This can be worth a lot of money, so a lower-paying job might really be higher when considering this benefit,” she explains.
Sign up for automatic payments
Did you know that some financial institutions offer a small interest percent discount when you sign up to pay your loans automatically?
“Contact the student loan issuer and ask about all of the available options,” says Taylor Schulte, a certified financial planner and founder of Define Financial.
With a simple phone call to the bank, Schulte’s family was able to lower their monthly interest rate on their loan. “To our surprise, just by signing up for monthly auto-pay we lowered our rate by 0.25%. Pick up the phone and start asking questions — you might be surprised what you learn!”
Consider joining the military
This option may not be for everyone, but joining the military for a period of time can help you get further ahead with your career and finances.
“They’ll pay back your student loans, give you a salary, house you, and give you the experience needed to actually get a job when you can’t find one after graduating,” explains blogger Addie Clark of Fit, Fab, and Foreign.
Pay the accrued interest
As mentioned above, you want to start making monthly payments on your student loans as soon possible. But what if you’re unable to do this right out of school?
“If you can’t make the monthly payments, at least pay off the accrued interest in a lump sum before that grace period is over,” says finance blogger Rebecca Stapler.
Direct all of your payments, whatever size they might be, towards accrued interest. “This will prevent the accrued interest from capitalizing,” she says, “which would mean that the accrued interest is added to your principal and then you pay interest on the accrued interest.”
Opt out of your grace period
The grace period you have after you graduate (usually 6 to 9 months) is a tempting notion. But a smart financial move is to opt out of this grace period the day you leave school.
“You can do so in writing and elect into an income-dependent repayment plan,” says lawyer Jay S. Fleischman of Consumer Help Central.
“Doing so will set your payment at or near $0 per month for the first 12 months because you probably had little or no income in the prior year,” he explains. Opting out of your student loan’s grace period could give you a headstart on repaying your debts.
Make debt payoff the focus (not your loan balance)
You might be overwhelmed at the amount of money you have to pay back. This can be discouraging for anyone who’s just starting out in the workforce and getting their footing in the world.
Lindsay VanSomeren, finance blogger at The Notorious D.E.B.T., shares her best student loan advice. “Don’t focus on the huge balance; it’s overwhelming. Make debt payoff a priority, but focus on tackling small chunks at a time — $1,000 increments or so. Each small chunk is mentally easier to deal with, and they do add up!”
Don’t ignore financial problems
The final piece of student loan debt advice may seem obvious, but it’s an easy trap to fall into: Don’t defer, forbear, or default on your student loans if you can avoid it. “Deferring only delays the inevitable and it takes that much longer to be free from the debt,” says Melissa Whaley, founder of Whaley Bookkeeping.
And don’t put off problems you have with your student loans or other debts — face them head-on. “Student loan problems will not go away if you ignore it,” warns former student loan borrower Krystal Hart. “You made a promise to pay it back when you took out the loan, so do it.” If you need help, ask for it but don’t assume the problem will just disappear.
Getting on top of your student loans will take time, but by applying this tried-and-tested student loan debt advice, you’ll be able to come out on top.
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