Discover ways to make repaying student loans more manageable.
If you have student loan debt, you're not alone. 69% of the 2019 graduating class took out student loans with an average debt of $29,000. Although this figure may seem overwhelming, a well-thought-out action plan can make paying off student loans more manageable.
explore your options
The standard amortization schedule for student loans is 10 years. But that may not suit you if your starting salary is low, or if you're having a hard time finding a job.
Be sure to evaluate your student loan repayment options . Federal student loans have a number of important features and protections to help make payments more manageable, as well as income-based options that allow you to make payments that are a percentage of your income. You can also apply for a deferment or forbearance, which allows eligible borrowers to temporarily suspend payments. During forbearance, you will remain responsible for any interest that accrues. If you qualify for a deferment, you may not have to pay interest.
Most lenders give a grace period of six months after students graduate. It can be tempting to wait to start paying off your loan, but if you have a job consider starting right away. Not only will you start reducing principal before interest kicks in, you'll get used to living on your income after the loan is paid off.
Set strategies and priorities
When faced with large, long-term debt like a student loan, it can be tempting to ignore hard numbers and a timeline that seems unconquerable. But you'll be much better off in the long run if you take the time early on to develop strategies for paying off student loans.
Start with a list of all your student loans — and any other debt, such as credit card bills — and have a firm grasp of how much you owe on each loan and what the interest rates are.
Bottom line: Dedicate extra cash to pay down debt with the highest interest rates, or use the debt snowball strategy, which recommends paying off small loans first as quickly as possible.
Analyze your budget
Between paying rent, utilities, grocery shopping, and the occasional outing with friends, it can be hard to see how student loans fit into the picture. A budget can help you manage it. To simplify the task, try the 50/30/20 budget rule method : No more than 50% of your income should go toward fixed expenses like rent, food, and utilities; dedicate 20% of your income to savings and debt repayment; and spend 30% or less for spending at your discretion ("fun money," for example).
Tip: Look in your life for areas where you spend too much and consider using apps to analyze habits and bills for potential savings.
don't do it alone
Check to see if your employer has a student loan assistance plan to help with payments. Although very few employers currently offer student loan debt repayment assistance as a benefit, more are planning to do so, and it never hurts to ask!
Refinance or not?
You may be able to save on interest by refinancing your student loans . But before you do, make sure you won't need to take advantage of the features and protections offered by federal loans, such as deferment, forbearance, debt repayment plan options, and public service loan forgiveness. In most cases, all that flexibility is gone once you refinance to private loans.
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