If you are like the average college student, you will graduate with around $19,000 in student loans. This may seem like an insurmountable amount to pay back, but with a few logical tips, you can get those loans paid off and out of your budget quickly.
First, if you can, postpone your repayment. Most loans, especially those backed by the government, offer you six months after graduation to pay back your loans. However, you may not be able to find a full-time job during that time. Unless you want to be stuck flipping burgers in order to pay back your loan, you need to apply for loan deferment until you find a full time professional position. Most loan programs offer this if you can show that you were trying to get a job but were not yet successful. You can also defer your loan repayment if you head to grad school.
When you are ready to repay your student loans, look at the total monthly payment you are responsible to pay. It should be 10 to 15 percent of your total monthly income. If it is less, pay extra to pay back your loan early. If it is more, you need to do something to lower it. More than 10 to 15 percent of your income going towards debt is a problem. You can extend the repayment term on some loans in order to lower your monthly payment. You may also be able to lower your monthly payment if you consolidate multiple loans into one loan. Loan consolidation also makes it easier to manage your debt, because you will only need to keep track of one monthly payment, rather than several.
You also can get someone else to pay back your loans. For instance, if you join certain charitable organizations, like AmeriCorps or Teach for America, you may be able to get a grant that can go towards your loan amount. Also, you may be able to get your loans forgiven if you participate in qualifying government programs, such as teaching in a low-income school district. You can find out more information about these opportunities by talking to your school’s financial aid office.
Education loans are not always a bad form of debt. While debt is costly, you may be able to deduct some of the interest you pay towards your loan on your taxes, depending on your income level. Also, your student loan enabled you to get the education you are using in your current career. So start paying back what you owe, but focus on keeping the rest of your life debt-free, rather than focusing too strongly on repaying your student loans quickly.
