American students are currently in a crisis and often find themselves with over $37,000 of debt by the time they graduate. Overall, the country’s debt due to student loans is over $1.3 trillion, which is more than the debt accumulated by credit card throughout the whole country!
More often than not, student loans are a necessary and vital way to put yourself through college and to get a high-paying and rewarding career, but the debt and stress that comes with it can sometimes be hard to see through. It may seem as though the party ends and is replaced by crippling debt after graduation, but it doesn’t need to be that way.
Here is our short guide to surviving life while paying off your student loan.
Understand your loan
It’s important to really understand what you are dealing with when it comes to paying off your student loan. It’s so simple to switch your brain off, set up direct debits to pay off the minimum every month and then forget about it. But to actually make an impact, you need to understand your debt.
First of all, you will need to put in some legwork to find out what you owe to who. Of course, this may sound simple, but past-you was likely not to have kept a record of everything in a neat and tidy place. To find out what you owe, you can order a free copy of your credit report to find out who your lenders are.
You will also need to have a look at your lender’s options and work out what payment options are available to you. Some lenders offer an income-based repayment plan, which is based on your earnings. If you are unable to make payments, there are options for you to defer student loans to a later date.
Make a budget
You probably learned to live a pretty simple and budget life at college, and this shouldn’t stop now. Sure, you worked super hard for years and are now (hopefully) earning some decent cash, but the sooner your debts are paid off, the better. The longer you can live off second-hand furniture and without extravagant purchases, the quicker you will be out of debt. To do this, you can continue to live with housemates rather than living alone, swap gig tickets and bar tabs for free museums, walks and dinner with friends and using public transport rather than paying for a car.
Think of it this way: every time you don’t go out for dinner and spend $45 on dinner and wine, is $45 which can go towards your student loan repayments!
Make a repayment plan
It’s highly likely that, as well as the loans you have stacked up, you would also have taken out a credit card while studying. On average, it is modestly estimated that students owe an extra $3000 on top of their student’s debts by the time they leave college. Remember to remember your credit card bills while you are dealing with your student debt and lay out a plan of action for repayments every month. Once you know what you are dealing with, you will be able to come up with a strategy!