How to Manage Your Student Loan Debt

As college costs increase, students and recent graduates may find themselves stressing about student loan repayments. Student loan providers often work to provide grace periods for college graduates as they find their first jobs, but eventually, these bills will be due.

The good news is that student loans are common, and graduates can balance their private student loans, federal loans, and other bills thanks to the better job opportunities a college degree affords them. There are multiple tactics graduates can use to pay off their loans quickly and while minimizing interest payments.

Budgeting, fast repayment, and refinancing are the biggest keys to managing student loan debt. Planning for the future can help motivate you to take the steps you need to successfully pay off your student debt without incurring unnecessary interest.

Check the Grace Periods

Student loan repayment plans usually have a six- to nine-month grace period before you owe payments after you graduate. This grace period could make all the difference if you’re moving to a new city to start work, or otherwise need all the cash you can get to cover short-term expenses.

The end of the grace period can also sneak up on you since the clock starts ticking as soon as your class load drops below full-time. If you’re a college student taking only a few classes your last semester, you may end up owing money just a month after you graduate. Double-check your loan’s exact terms and conditions on your payment plan and make sure you fully understand them to avoid surprises.

Budget Carefully

Eating out, unnecessary shopping trips, and partying with friends at bars can drain your budget faster than expected. Having multiple outings per week can easily rack up credit card debt each month, which can make it much harder to pay off your loans quickly.

It’s difficult to control spending accurately when shopping or eating out, especially when taxes and tips are included. Start packing lunch for work, and save eating out for special occasions. Make a shopping list for every trip you make and stick to it, or shop online if in-store sales are too tempting.

As more adults work on paying off their student debt, it’s okay to tell your friends that you’re trying to budget better. Chances are you have multiple friends who would be happy to hang out at your home for drinks instead of buying expensive cocktails at a ritzy bar.

Pay it Off Sooner

Student loan interest usually compounds daily, so the longer you have debt, the more time it has to accrue interest. Making only the minimum loan payment each month means you’ll end up paying more in total, which takes away from your ability to save for retirement or vacations.

It can be tempting to invest in the stock market or retirement funds, in an attempt to build wealth over time. However, the high-interest rate on most student loans means that debt can be a massive drain on your ability to save long-term. Focus on paying off debts first to secure a financially healthy future.

If you have multiple loans, you need to pay off the one with the highest interest rates first. Graduate degree loans typically have higher interest rates than undergraduate, so if you have advanced degrees, double-check the rates on the most recent ones and plan accordingly.

Refinance Your Loans

Refinancing loans allows you to consolidate private and federal student loans into a new repayment option with a lower monthly payment. Your new lender will pay off the old loans, then allow you to repay them over time.

Many graduates qualify for refinancing but don’t take advantage of it. Your eligibility will mostly depend on your credit score and income, but lenders are generally happy to work with you even if your credit report isn’t perfect. Applying online is quick and easy, and could save you hundreds of dollars or more over the lifetime of your loan.

Plan for the Future

Budgeting and planning is a hassle, and it can be a challenge to stick to short-term and long-term budgets. One of the best ways to motivate yourself is to set long-term, concrete goals, and use those to decide your short-term plans for budgeting and paying off loans.

For example, if you want to buy a house in ten years, keep in mind that your student debt affects your credit score and your ability to get a mortgage. You’ll want your student debt to be low and have as many on-time payments as possible by the time you’re ready to buy a house. Having this plan in mind can be a powerful motivator as you make day-to-day purchases and budgeting decisions.

Set Up Automatic Payments

Automatic payments are the easiest way to stay on top of your loans and avoid late fees. Most loan providers let you set up automatic payments online anytime and allow you to choose the time of the month it’s deducted from your account.

Paying your student loans at the same time each month makes budgeting easier.

Call T&I Credit Union to Discuss Your Student Loan Options

At T&I Credit Union, we’re proud to offer 24/7 customer service. We offer new student loans as well as refinancing options for existing loans, plus a range of other personal loan options.

We’ve partnered with credit unions around the country to create a network of branches and ATMs, making us a partner for all your financial needs. Contact us at 1 (800)-338-3908 to learn more about our loans and other financial services.

About Marsha Smith

Marsha Smith was born and raised in Ohio, where she obtained her Bachelor of Arts in Public Affairs. She is passionate about financial literacy and helping other young people navigate student loans, car payments, and buying a home.