If you graduated in May or June, you’re likely like me—one of the 7 in 10 students in the Class of 2014 with student loans—and you may be equally celebrating your completion of college and dreading paying back your student loans. Graduation day may have been the best day of your life so far but the repayment countdown clock began the minute you received your diploma. Never fear recent grads, I’ve investigated paying back Federal student loans. Here are steps we can take to prepare for the day the grace period ends:
Develop a Personal Finance Style
Graduating changes your financial circumstances. If you’re starting your first salaried position, you’re likely dealing with new financial variables. No matter where you fell on the frugality scale in the past, this is a good time to reevaluate your relationship with money and start setting goals. There is no lack of advice on personal finance—follow columns, read blogs, and buy or check out books. If you have a financial adviser or trust someone's financial advice, develop a game plan with their help. There’s no perfect method for handling your personal finances—the right way is being cognizant and in control of your money.
Your Education Continues
“It’s 10 pm. Do you know where your children are?” The public service announcement you may really need is, “It’s less than six months before your student loan payments start. Do you know who your loan servicer(s) is?” It’s been years since you’ve signed some of your promissory notes and you may not remember the terms and conditions associated with each loan. Channel the skills college helped you develop by educating yourself on what you signed. If you haven’t completed exit counseling yet do it ASAP; it will give you much of the information you need. Additionally, Project On Student Loan Debt's Top 10 Student Loan Tips for Recent Graduates is a great starting point for sorting out your student loan situation.
Spend Time Considering the Best Repayment Plan for You
Federal Student Aid lists the details and eligibility for each repayment plan. If at all possible, choose the plan with the least interest accrued over the course of ten or twenty-five years. It may not seem like the salary accompanying your entry level career will go far, but you don’t want your student loans to compete with the increased financial responsibilities you’ll likely incur in your personal life while advancing in your career, not to mention inflation. Pay more principal now and save yourself interest in the long run.
Start "Employing" Your Money
During my junior and senior year, I was responsible for paying the apartment-related expenses my roommates and I split. I opened a separate checking account dedicated to depositing my roommates’ share of the expenses and paying the bills. I’m now using the same account to build a nest egg to pay for my student debt. Giving your money a job description by budgeting it. Budgeting for your student loan payments will ensure you have more funds to dedicate to your financial responsibilities.
Find New Ways to Chip Away
You can use innovative or not-so-creative ways to supplement your income and pay down your debt faster. Here are a few ideas:
I remember digging into my change to pay for a sandwich about a year ago when a customer behind me commented it was cool to see someone actually use change. I didn’t realize it was passé. Money seems to spend itself faster in the form of plastic rather than paper. Another benefit of "going green" is the change. Collecting coins in a spare change jar can add up—in fact, I went to the bank with $115 worth of change last week. I also get a weird rush out of selling “stuff”. I’ve bought and sold books on Ebay’s Half.com for years. I also use Craigslist (carefully) and Facebook Buy and Sell groups to sell furniture and household items I don’t need. My newest financial find is Ibotta, a phone app where you can earn rebates for buying everything from groceries to clothes and movie tickets. Once you reach a $5 credit you can cash out by transferring the funds to your PayPal account.
by: Paige Witthar
