For many recent grads, student loan debt is a fact of life. With costs rising every year, college is unaffordable for most students unless borrowing is involved. While savings plans and 529s can help reduce the amount, chances are that some debt will be necessary to get you through school.
If you’re wondering how you’ll manage your student loans, attorney and student loan specialist Chad T. Van Horn offers these four tips:
How to Manage Your Student Loans
1. Don’t ignore them
Unfortunately, many recent grads discover they can’t afford their loan payments once they’re done with school. You don’t really think about how you’ll repay those loans while getting an education, but reality sets in pretty quickly. The job market remains tough, and getting a full-time job that allows you to repay your loans can be difficult.
That being said, Van Horn warns that “Ignoring loans can have drastic impacts on a new grad’s ability to rent an apartment, lease or buy a care, or secure a mortgage in the future.”
If you can’t make your payments, don’t ignore the problem. You have a number of options. For one, the government offers a consolidation plan for government-backed loans that bases your payments on your income and ability to pay. Talk to your lender about what would work best for you.
2. Avoid deferment (if possible)
Deferment is one of the options available to you when you run into financial hardship. This option allows you to put off payments “officially” for a set period of time. However, interest continues to accrue on your loan — and you could end up paying much, much more over time. Deferment, says Van Horn, “can be a very costly mistake.”
3. Start with private loans
If you want to tackle your student loans quickly, Van Horn advises getting your private loans out of the way. Keep making the smallest payment possible on your federal debt, and put the rest of your focus on your private loans. (Federal loans often have lower rates and more forgiving terms.)
4. Consider consulting an expert
If you have questions about how to proceed, it might make sense to contact an expert. New grads who feel overwhelmed should look for an attorney specializing in student loans and other types of debt to help them work out the best course of action. Be careful who you hire, though, because as Van Horn points out: “There are many businesses out there that are all too willing to capitalize on students who are unsure of how to go about the loan repayment process.”
Help our new grads out! What’s your best tip for managing student loans?