Taking out student loans is no walk in the park, and the idea of paying off student loan debt after you graduate can be overwhelming. Don’t let the thought of student loan debt discourage you from taking out student loans to maximize the benefits you’ll receive from a solid higher education experience. There are several ways to make the process less stressful and more manageable.
Although there’s no trick or hack to get out of paying off your student loans altogether, there are definitely steps you can take to prepare yourself for responsibly handling and getting ahead of your impending finances. As long as you remain organized, mindful of deadlines, and optimistic about your future, the following steps will give you a great head start toward overcoming your student loan debt as a new graduate!
First, you need to figure out exactly how much you’ll be making versus how much you’ll be spending, which includes your income, utility expenses, car and insurance payments, rent, food, and any recreational costs. Find out the minimum monthly payment for your loans, and start putting away exactly that amount—or slightly more if you can manage—during your grace period.
By allocating funds to your student loan debt before any payments are due, you’re giving yourself the opportunity to put down more than the minimum monthly payment for the first few months. You’re also practicing responsible spending and saving habits as well as getting an accurate idea of how much you’ll be saving versus how much you’ll be spending each month.
You can also start paying off your student loan debt during your grace period to take a chunk off your total balance due before interest starts accruing!
In order to pay off your student loan debt as a new graduate, you’ll need to be generating income that equals a greater amount than your total costs of living plus your monthly student loan payment.
One of the best ways to get a head start on generating income while in college is to work a part-time job whenever you have the time. If you have classes every day, get a job that allows you to work a flexible schedule, such as a job in the service industry. Most fast food, restaurant, and movie theater employers are more than willing to work around their part-time employees’ school schedules so that you work a few hours before or after class a few days a week and then work longer shifts on weekends.
One of the best part-time jobs you can get as a student is a waiter or waitress position because the tips you earn will determine your income, and you can hustle as much or as little as you want as a server!
It’s likely that you won’t know exactly how much you’ll have to spend and how much will be going toward your loan each month until you’re on your own and start planning those first payments alongside any additional financial responsibilities.
Until you know exactly how much extra funds you’ll have after fulfilling all your immediate responsibilities, continue living like a college student; that is, keep your roommate, don’t make any big purchases, don’t finance anything (like a car, a new iPhone, or any new personal loans), and avoid all nonessential expenditures. For instance, instead of going out and paying for dinner and drinks on Friday nights, invite your best pals over for wine and movies!
If you’re following your budget, working a part-time job, and living conservatively, there’s a good chance you’ll be able to exceed the minimum monthly payment either every month or every few months. Take advantage of these opportunities to knock out some extra student loan debt so that you end up paying less interest once all is said and done.
Make sure you specify with your student loan provider that you want to allocate those extra funds to your principal balance and not any future interest. Make sure that you’re also not allocating more funds than you can spare to your student loan debt to try and get it paid off as quickly as possible. Remember that you’re going to be paying off your student loans for 10+ years, which means you don’t want to be completely broke all the time.
There will be opportunities to refinance your student loan at a lower interest rate. If you refinance your loan at a lower interest rate but keep paying the same monthly amount, then more of your monthly payment will be going toward your principal balance rather than the interest you owe. This will help you get the loan paid off in less time. Or, you can just pay the new smaller amount each month if you were struggling to meet your initial payment.
Another perk of refinancing is that if you have multiple student loans, you can consolidate them into one payment. Keep in mind that refinancing is only an option for a private loan. So, if your initial student loan was a federal loan, then you’ll lose any benefits that come with the federal student loan program.
Once you’ve graduated and you’re ready to start applying for full-time jobs in your field, keep in mind that some employers help their employees pay off their student loan debt as a standard workplace benefit.
In addition, employers in some industries offer student loan forgiveness, which basically means a portion of your student loan debts is forgiven. Typically, loan forgiveness is offered after you’ve been making payments toward your student loans for 10 years. Most employers that offer this benefit are those in the public service sector, including non-profit organizations and local government organizations.
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