How to Manage Your Student Loans

In 2018, 69 percent of college students graduated with two things: a degree and a $29,800 debt.

If you’re among these graduates, welcome the world of student debt. In a country where the collective student debt stands at over $1.25 trillion, there’s no doubt many people are feeling a pinch. Paying about $350 a month for the next decade can take a toll on your financial plans.

What should you do if you’re struggling to stay on top of your student debt? Throwing in the towel isn’t really an option.

Here’s a comprehensive guide on how to manage student loans.

Be Careful When Taking Out Student Loans

A mistake most student loan borrowers make is starting to care about the level of their debt only after they graduate and start making some money. This is when they have an obligation to service the debt.

If you’re in college right now, this is the best time to start evaluating the kind of student debt you’re getting into.

Student loans, like other types of loans, come in all shapes and sizes. Some have friendly terms and conditions than others. Federal student loans, for example, typically carry a lower interest rate than private student loans.

Some federal loans have flexible-income driven repayment plans and others can be forgiven. This isn’t the case with private loans.

When you’re applying for your student loans, it’s important to keep such differences in mind. It will be a financially reckless move on your part if say, you forgo federal student loans in favor of private loans. You’ll only be setting up yourself on for financial headaches after school.

Make Use of the Grace Period

Some student loans have a grace period; others don’t.

A loan with a grace period doesn’t require you to start making repayments as soon as you graduate. If you have this kind of loan, it can be tempting to enjoy your grace period, especially if you find a job right after college.

It’s understandable. As soon we get our first job, many of us want to improve our lifestyles: move into our own homes and buy new clothes, better electronics, furniture…the list goes on.

There’s nothing wrong with this is you have a salary that can comfortably afford you the lifestyle you want and pay all your bills. Unfortunately, this isn’t the case for most people. 78 percent of American workers are living paycheck to paycheck.

This is why you should take advantage of the grace period. If you get a job soon after college, start paying off your student debt loans right away. The sooner you start, the earlier you will clear off the loans.

Plus, you’ll be able to adjust your lifestyle accordingly. If you wait until the grace period lapses before you starting paying off your student debt, there’s a chance you would have embraced a lifestyle that you cannot sustain once you start servicing the loan.

Keep Living Your College Lifestyle

Speaking of lifestyle, an effective student debt management hack is to keep living your college lifestyle even after graduating.

Granted, no one likes college life. The cheap food and alcohol, budget clothes, and whatnot make for a less-than-desirable life. Graduating should free you from such a life.

Well, student loans have to be paid too. If your finances after college don’t shape up nicely, it makes sense to keep living a college lifestyle.

There will be upgrades, yes, but keep a frugal life. Move into a cheaper apartment in a neighborhood with a low cost of living.

Even if you secure a good job with a competitive salary, avoid the temptation of a flashy, pricey lifestyle. We all want a sprawling apartment with amazing views, but this won’t be a financially savvy move if you still got student debt running into five figures. What if you lose the job tomorrow?

Consider Student Debt Refinancing

Do you have multiple student loans?

If yes, wouldn’t you love if you were dealing with a single lender? With student debt refinancing, this is possible.

Refinancing means replacing an existing loan or loans with a new one. In most instances, the new loan has better terms, such as a lower interest rate or a longer term, or both.

If your refinancing application is successful, you’ll get the money to pay off all your existing loans. You’ll then start paying off the new loan, possibly with terms that suit your current financial situation.

There are lots of companies offering student debt refinancing, so be sure to do extensive research before making a pick.

If you’re eyeing Credible, for instance, get a full Credible review before taking up their refinancing product. You don’t want to fall into the trap of a predatory lender just because you’re trying to sort out your student debt.

Pursue Debt Forgiveness

Some student loans offer debt forgiveness or cancellation programs. If you’ve got such a loan, perhaps you can pursue forgiveness.

If you have a Perkins Student loan, for example, you could qualify for debt forgiveness, as long as you’re in a qualified career full-time. Such careers include firefighting, law enforcement, nursing, and Peace Corps volunteering.

Most federal student loans also offer borrowers the ability to select a payment plan that suits their financial situation. Although these plans have strict qualification requirements, it helps to check whether your loan has such benefits. Even getting your monthly repayment halved can make a big difference in your finances.

Get Professional Help

Student debt can wear its ugly head and come crashing down on you. If you’re in severe financial pressure and your student loan lenders aren’t relenting, consider getting professional help.

There are lots of non-profit organizations offering student debt help services across the country. Debt management professionals in these organizations can assess your financial situation and help you to craft a suitable strategy. They can also get in touch with your lenders and get them to agree to a new repayment plan.

Know How to Manage Student Loans

Student debt can dog you for years. It can even ruin your financial plans and keep you away from attaining financial freedom. But when you know how to manage student loans, you’ll be in a better position to keep paying them while living your best life.

Put the strategies fleshed out in this article to use and keep reading our blog for more tips on personal finance.