(read number 3)
I remember the day I graduated like it was yesterday, the sun was shining, the birds were chirping, and I couldn’t stop smiling, until I got home that is. Lying on my kitchen table was a letter from my student loan company informing me that in 6 months I would have to start paying back thousands of dollars, ouch.
Forty years ago our parents were concerned with Vietnam, politics, the disco era, and taking over the world in their perspective fields. Worrying about student loans and having good credit after graduating college was not a major concern for them.
Many young people in their 20’s are faced with $20,000-$100,000 in debt upon graduating from undergrad.” This debt-for-diploma system is strangling our young people right when they’re starting out in life,” says Tamara Draut, author of Strapped: Why America’s 20- and 30- Somethings Can’t Get Ahead. “It’s creating a sense of futility that no matter what they do, they’re not going to be able to get ahead. It’s a sense of hopelessness.”
Trust me, like most of you I was freaking out when I received my first student loan bill. Staring at that huge amount of money that had to be paid back with my name on it almost gave me an anxiety attack, it was too much. Instead of completely freaking out I took a deep breath and did some research on ways to pay off my debt. Here are some helpful steps I learned:
Pay off your credit cards, first
I know it’s hard to believe, but paying off your education should not be number one on your priority list when it comes to your personal finances. Credit cards accumulate 15% to 20% in interest rates, so the sooner you pay down the higher interest the more money you save.
Consolidate!
Instead of paying 2 to 5 different student loan bills every month, consolidate them all into one. By doing this you can have one low interest rate and rid your self of a huge headache every month.
Make a Decision
Many recent graduates go back and forth on whether they should start paying off their student loan bills right away. The best thing you can do is make a decision as soon as possible. Develop a pay off schedule or defer your loans right after graduation. Whatever you do, it’s important not to stall!
Set Aside Money
If you do decide to defer your payments, set aside a small amount of money each month as if you are paying a student loan bill. Knowing that you have a student loan stash saved away will help you feel more in control of your financial status.
It’s your future
Most importantly remember to take your student loan repayments seriously. The longer you put it off, the more it will effect your life in many ways. Whether it’s buying a car, buying a home, obtaining credit cards, etc, you must pay these loans back as soon as possible.
If you want more information on how to pay off your student loans, check out the book Zero Debt by Lynnette Khalfani.
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Good to know im not the only one freaked out by student loans! Thanks for the tips…
Great article… I’d add a couple of suggestions that have zero cost associated with them:
-increase your financial savviness and literacy… there are so many FREE classes on finances and debt offered! And while they aren’t all great, you can definitely become smarter and savvier over time.
-find a *good* not for profit/non profit financial advisory service… for a lot of folks coming out of college, loan repayment/debt consolidation isn’t something they understand… it’s good to have someone helping you through the process (again… take this with a grain of salt… use an organization that’s GOOD and/or referred by someone you trust)
-some graduate/professional schools will pay off your student loans, or offer you credit towards paying off your loans. For example, if you are a Mellon-Mays fellow and you pursue a PhD within 36 months of graduating from college, you are eligible for 10,000 in loan repayment and 5,000 in graduate enhancement money.
Very good tips. I have about another year left, but its great to have some starter tips for when the time comes for repaying loans.