Nearly 7 in 10 seniors who graduated from public and non-profit colleges in 2015 had student loan debt, with an average of $30,100 per borrower, according to the Institute for College Access & Success. While it may seem like a lot of debt to overcome, especially when graduates are just beginning their careers, there are some ways to ease the burden of the debt.
Cut Some Corners and Resist Temptation
It is easy to think once you land a job, you don’t have to worry about money. But with newfound freedom comes additional costs like rent, car insurance, food, and paying back student loans. Think about a monthly budget that shows you what bills you have and what is left over. Think about the bigger picture and what you can live without. Cable is fun to have, but not a necessity, and it can cost over $100 a month. Consider streaming methods, such as Netflix and Hulu, for entertainment. Even an Apple music or Spotify subscription may be better than purchasing music one song at a time. Clothing can be expensive, but don’t forget to search for coupon codes to score major savings and free shipping.
Know your Numbers, Including your Credit Score
Right before graduation students receive a letter outlining their specific grace period before starting to pay back loans. In the letter is how much the loan is and what the monthly payment looks like. Pay special attention to the interest rate prior to establishing a payment plan. There are many payment options, such as delaying a payment or asking for a lower payment available to recent graduates. If you haven’t landed a job — or have lost your job — student loan forbearance may be available.
Establish an Emergency Fund
Set aside funds for unexpected expenses, such as car repairs or medical costs. Having a cushion can make all the difference when you know you need to eat and pay rent, but have student loan payments or other bills looming. Many financial experts encourage recent grads to have three to six months’ worth of expenses as cash reserves.
It’s Never Too Early to Think About Retirement
Many people think only older individuals worry about retirement. Everyone should start thinking about this when they join the workforce. Many employers offer 401(k) plans to help their workers save for retirement on a tax-deferred basis. Ask your HR director for more details on the benefits of your company’s 401(k) plan. While you may think you are too young to think about planning for retirement, you’re never too young to accumulate wealth.
Student loans don’t have to be a huge nightmare. Try these steps to lessen the stress of student loans and plan for your financial future.