Once college ends, graduates prepare for life in the real world. Their focus shifts from writing papers and studying for exams to finding a place to live and beginning a new career. But just like the memories of college and the many lessons learned, there’s one more thing that will stay with them for years to come: student debt.
If you’re feeling the stress of student loan debt, here are some tips to help you deal with this often overwhelming financial obligation:
- Make additional payments. Sure, it might not be an easy thing to pull off, especially when you’re just starting out in the job world. But if you can swing it, extra payments here and there can have a huge impact on the time it takes to settle your debt, as well as the money you’ll save in the long term. Make sure your lender applies the additional amount to the principal balance to reduce the amount of interest you’re paying.
- Set up automatic payments. Many lenders will offer discounted interest rates for using autopay. It may not make a substantial difference — perhaps a few hundred dollars — but it’s something.
- Start a dedicated account for student loan payments. Creating a fund reserved for paying off student debt ties into another tip: budgeting. When you get paid, have a portion automatically deposited into this account, and don’t touch it. If you keep this account as a “walled garden”, you’re more likely to resist the temptation to use it for other interests. Shop around for high-interest savings accounts to give your money a boost.
- Seek out companies or careers that offer student loan forgiveness incentives. Some government and nonprofit agencies, for example, may offer student loan forgiveness programs for employees. And after working for a certain amount of time, you may qualify to have your student loan balance canceled.
- Refinance — with care. Refinancing your debt can be a good option if your loan carries a high interest rate, or if you have multiple loans that you want to consolidate. Bear in mind, if you refinance a federal student loan, you give up eligibility for government student loan forgiveness or other potential money-saving options.
When it comes to student loans, pitfalls can arise when you don’t know all the rules for managing long-term debt. Advice from a knowledgeable financial resource can save you headaches, complications and most importantly, money as you begin your post-college journey.
