Tips & advice on getting your finances back on track.
When you are just 18 years old, the thought of paying off your student loans doesn’t cross your mind. You are just excited to finally have the college experience everyone is always talking about. However, if you are like 70% of young US students, you will have to take out student loans to help pay for your college education.
Read More: Avoiding The Student Loan Trap
You go off to college, and focus on yourself and graduating with a degree. You finish your degree, and then ask yourself: what’s next after graduation? You might have big dreams of moving out on your own right after college to immediately start that next chapter of your life. Before you make this move, you might want to consider what will happen six months after your graduation when your student loan payments will need to start being made. Those dreams of moving out of your parent’s house and into a place of your own might have to be put on hold.
So, you move home with your parents and back into your childhood bedroom, only to receive your first letter from your student loan servicer. On average, US students pay $280 each month for the next 118 months. You think; will I ever move out of my parent’s house, how does anyone afford this, will I be able to live my lifestyle and make these payments every month? It’s enough to have an existential breakdown when you try to reconcile your income with your expenses.
The thought of being chained to student loans for the next ten years is enough to make any young person cringe. Think about this: You’re not alone. Today more than 44 million Americans have student loan debt. The country is trillions of dollars deep in student loan debt, and more and more people are graduating college with student loans than ever before. It is almost impossible to find a full time job with a decent salary right out of college, making it harder for young adults to pay off their student loans and start the next chapter of their lives.
How to become the master of your student loan debt:
Student loans seem to be a necessary evil to attend college, but how do you avoid the stress of your student loans post-graduation? Here are some tips that can help:
1. Know what day your loans are due every month
Your loans will be due on the same day every month. If you have not set up an automatic payment, it is important you know what day they are due so you do not miss a payment. (Seriously, set up an automatic direct debit and this won’t be an issue!)
2. Say no to going out one weekend a month.
Instead of going out with your friends to a restaurant or bar, suggest a night in. You can put the money to the side for your next student loan payment.
3. Make more than your minimum payment each month.
Even though this might sound near impossible, try to make more than your minimum payment each month. By just paying $10 more a month you are lessening the time you have to pay off your loans and you will reap the benefits of paying less interest over the life of your loans.
4. Beware of lifestyle inflation.
Keep a firm hand on your expenses, especially if you receive a pay rise. By keeping your lifestyle in check as your pay goes up, you will be able to put that extra money directly on your student loans. This doesn’t sound like a lot of fun, but you will be freed from the student loan prison faster. Go for the delayed gratification!
5. Live with your parents as long as you can.
This may seem like a cruel and unusual punishment for someone who has studied for a degree, works hard, and is generally a contributing member of society, but hang in there for as long as you can. They’re doing you a favor and allowing you to pay off more of your student loans at a faster rate. Smile at them more, they might be looking forward to their freedom too.
Although your student loan debt may seem never ending and impossible to pay off, don’t stress. Remember, you took out these loans for a reason: to get a college degree to further your career. Even if you are frustrated with the job market right after you graduate, it will take time to get better.
Katherine Fatta is the Social Media Coordinator at Navicore Solutions. She creates fun and informative social media posts that engage the public.