“Remember, a student loan is a mortgage on your future earnings,” — Forbes Contributor Robert Farrington.
Graduating college is a bittersweet process. You’re finally heading off to the real world (no, college is nothing like the real world), and you’re finally starting the next chapter of your life, whether it’s getting your dream job at the White House, working for corporate America, or heading to graduate school. Yet, you have so much to deal with – leaving school and figuring out where you’re living next, leaving your friends, and the worst of all, paying off your student loans.
It’s the green monster that needs to be dealt with head on. You can push them off and try to ignore them, especially during your grace period, but it will hurt your future financially. Don’t take this time lightly, get a head start and pay off your loans before it swallows you up for the rest of your life. Here’s some must-do tips that will help you tackle your student loans like a champ.
Understand what kind of loans you have and figure out which one to start paying first
The first step to starting anything is getting the basic facts and information. Find out what type of loan you have, what are the requirements for each and which one you should start paying first. Some people only have one type of loan to pay off, but most have multiple ones, whether it’s private or federal.
Private loans tend to be less lenient when it comes to repayment because they don’t offer Student Loan Forgiveness Program, so the general rule of thumb is to pay those off first.
Also check the interest rate on each loan. See which one is higher and start making bigger payments towards those to avoid paying unnecessary interest.
Taking advantage of the grace period
Grace period is the time you have between the first student loan payment and your graduation date, aka your “preparation” time. The standard grace period is six months, but it can be extended to up to three years if you serve in the military or go to graduate school. Don’t take this time for granted! Use this time to prepare yourself, do some research, make some extra money, and create a future budget plan. The grace period is meant to give you some time to get your finances situated, so don’t screw it up!
Treat your loans like a regular monthly payment
The easiest way to push off paying your loans is ignoring it and not including it with your other regular monthly payments. Treat it like it’s another credit card bill. You have to pay for it no matter what or you’ll rack up interest costs, again, causing you to pay way more than you should. Just think about it this way, if you don’t pay for it, your credit score will be ruined and your plan to buy and get all the houses and cars you want will be marred by this one task you were perfectly capable of doing.
Budget, budget, budget!
This word has been beaten into millenials’ minds so much, but it’s one that has to be said constantly. Like we said in our last “How to Budget Your Life” article, do you really need that overpriced almond milk latte everyday? Cutting down on unnecessary costs will save you a few headaches and heart attacks at the end of the month when you’re faced with paying your loans and bills. Set aside a certain amount of money each week for your student loan fund, and you’ll end up with enough money on the 30/31st, if you stick to it.
Take on side jobs
To paraphrase Fergie, a little extra cash never hurt nobody. Entry-level salaries aren’t always the best. Many times you work like a slave and end up getting paid like a slave. Do some weekend jobs, help out the neighbor on some small tasks, or learn how to do some secret shopping (don’t worry, we got you on this one).
Remember, you’re not the only one out there
More than two-thirds of Americans going into college take on student loans, according to NYTimes Student Loan calculator. Higher education is getting more expensive and politicians have yet to propose and implement an effective way to combat these high costs and eliminating debt. Some days, you might struggle to pay your loans and want to give up, but just remember, you’re not alone. Millions of Americans are in the same position as you are, and millions got themselves out of the student debt life. You can too.
Just remember to research, plan, budget, start early, and stay positive.