So your working your first job post College and your excited about your upcoming first pay check. Only one thing is in between you and a wild night out on the town; $30,000 in student debt that you have to deal with paying off. The thought of this student debt alone will most likely ruin your mood and make it seem like you will not see a profit for years. I’m here to tell you that you can take a breath and relax, this guide will show you the cure if you happen to be a College graduate drowning in debt.
Step 1: Accept your situation. You can blame the whole world for the fact that you had to cover your education costs through loans but where will that get you? Your parents worked hard to raise you, feed you, and put a roof under your head. Don’t go blaming them or anyone else for not being able to pay for YOUR education.
Step 2: Educate yourself. Read as many books, blogs or magazines as you can on the subject so that you understand the situation completely. Take some evening courses or speak with friends that work in the financial industry.
Step 3: Consolidate your loans. If you obtained various loans in order to cover the costs of your education then your first priority should be to consolidate them. Obviously while looking into consolidating your debts you should seek the best possible rates.
Step 4: Make the payment automatic. Go to your payroll office or even to your bank and set up an arrangement where a set amount of your paycheck will go towards paying down the debt.
Step 5: Be reasonable. Don’t expect to pay this debt off right away, it took you anywhere from 3-5 years to acquire it so it will take an extended period of time to pay it off.
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Step 1: I prefer a roof OVER my head personally.
Step 3: If they are govt loans then the rates may be locked in if they are new so consolidation won’t do much, if they are old then the rates only change in July, and wait until you can guess if it will be better then instead of just jumping on it, I am just letting mine go until it gets close enough for me to decide if I need to LOCK IN the current rates.
Step 5: I guess I just don’t worry about mine very much, let em auto take it and know that it will come out for a while, in a few years I will get some raises and make it easier to pay it off, why push to get them paid off while I am still a bit tighter on funds.
Great advice for anyone struggling with college debt. Both my wife and I are paying down on our loans. A couple additional thoughts: You have a six month time span from graduation till repayment begins. Use this time to find your occupation and plan your repayment (we are paying ours off as early as possible). Also, if it is a government backed loan (Sub Stafford, Unsub Stafford) then there are deferment options that can allow you to defer your payments for up to a year. Keep in mind though that interest will still accrue on your loan.
I guess every loan is different but I will share a bit of a horror story with student loans. My friend completed a Community College program which he paid for with a government student loan. The only problem was he never found work in the field right away and as a result couldn’t come up with the payment after the 6 month period. This was not an option and his account kept on getting charged. Since he had no money in the account he would have to pay an “insufficient funds” fee. This ties into Mr.Imperfect’s point; the first 6 months after college are crucial. You have to deal with the pressures of the real world all while trying to find that dream job.