Dealing with Student Loan Debt in Your 20s
College graduates today are faced with many challenges —towering student debt, a competitive job market, a failing economy, and many other “real world” things that newbie grads have been taking on for years and years. Of course, money is always a huge concern for 20-somethings just gaining their footing in the world of financial responsibility. This is the way it goes—the years after college, increasingly becoming known as our years as “20-somethings”, are difficult because of their uncertainty and instability. There are few things more daunting to newly graduated young adults entering the world post-graduation than doing so with seemingly immeasurable student debt. Numerous graduates whether they are just out of undergrad, a doctorate program, or a specialized degree program like the MBA (master of business administration) or MFA (master of fine arts), are being put in extremely difficult positions. With student debt rates higher than they’ve ever been in history, it can be very easy to feel in completely over your head. Use these tips to create a successful student debt repayment action plan and successfully gain your footing as a financially responsible 20-something adult.
Create Reasonable Goals
Gaining control of your student debt and finances as a recent grad can boil down to setting goals and creating a careful plan of action. Look at your student loan payments and come up with goals for your repayment. Think about things with both a short term and long term mindset. Take some time to sit down and really look through your student loan debt. It is advised that you try to make the suggested monthly payments plus a few dollars extra whenever possible—of course, paying more than this is always a plus. Staying at the absolute minimum is fine obviously, but it is not ideal. Look carefully at your personal finances and try to decide where you can find extra finances for your loan payments. Budgeting is a great way to stay on top of your money, spending, and saving. In the long term, the general repayment period for paying off a student loan is 10 years. This is a good place to start for your long term payment goals. Try to find ways to reduce that 10 year mark wherever you can.
Research Your Loan Terms
While goals are certainly essential for gaining a careful grip on your loan payments, they aren’t going to get you very far if you don’t really understand your loan terms. Take some time to sit down and do some research. Read through the terms of your loan and figure out when payments are due. Pay close attention to when your loan’s “grace period” is up and other specific terms of payment you need to know. Most lenders give graduates a grace period after they graduate where no payments are due immediately. However, that grace period can vary. Be sure to study and research your own loan or loans that you have taken out for school expenses, but also look into loan repayment information in general. There are a lot of useful tools and resources available to help people deal with debt in a better and smarter way.
Loan Extensions and Consolidating
Many lenders will allow graduates to lower their monthly student loan payments from the start of their payment process. This can be extremely enticing for a new grad out of work or overwhelmed by loan payments. However, it may not be the best option all the time. Be sure to do your research. By consolidating your loan or extending your loan repayment you can gain some immediate relief, but suffer for it in the long run. By extending your repayment period you will be making more payments overall and be paying more in interest typically. Of course, there are times when loan extensions and consolidation might be needed—this happens from time to time especially in today’s economy. However, if it can be avoided, most would suggest trying to make at least the minimum payment monthly as long as you can.
An experienced writer on all things related to higher education and business, Amanda Watson spends her days covering the latest stories on various topics such as online mba rankings, college finances, web entrepreneurship, and social media marketing. You can contact Amanda at email@example.com.