Graduation is an exciting milestone signifying moving into adulthood. Unfortunately, with earning a degree, comes debt.
Nearly seven 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.
There are ways to alleviate some of the worries of student loans.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. 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 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.
2. Know your numbers, including your credit score.
Right before graduation students receive a letter outlining the six-month 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.
There are several repayment plans from which to select, thereby providing the flexibility you need. Here are some things you should know:
3. Establish a rainy day 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 months’ worth of expenses as cash reserves.
4. Remember: 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.
- If you don’t choose a repayment plan, you will be given the Standard Repayment Plan, which means you would have to pay off your loans in 10 years.
- You can switch to a different plan at any time to suit your needs and goals. For example, if your finances change due to a new job or losing a job, you can explore different options. Visit https://studentaid.ed.gov and look at the repayment calculator estimate. This tool can help you determine the most appropriate repayment plan for your situation.
- If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This lessens the stress if you have separate loan payments from different providers. If you consolidate, you will have one monthly payment to make.
-
QUIZ: Test Your Retirement IQQuiz Are you smarter than…everyone else? Test your retirement smarts with this quiz.
-
Where There's a Will, There's a Way Your Assets Will Be Distributed as You WishYour will is the backbone of a strong, adaptable estate plan that ensures what you leave behind goes to your selected beneficiaries. Without a will, state laws determine who gets your assets.
-
Where There's a Will, There's a Way Your Assets Will Be Distributed as You Wish
Your will is the backbone of a strong, adaptable estate plan that ensures what you leave behind goes to your selected beneficiaries. Without a will, state laws determine who gets your assets.
-
I'm a Financial Adviser: This Is What You're Really Losing if You Cut Back on Your 401(k) ContributionsMissing out on the benefits of the employer match and compounding growth could force you to work longer and lower your standard of living in retirement. Here are some alternative options.
-
Preferred Bank Stocks: The Investment Retirees (and Others) May Be Missing Out OnMost large banks issue preferred stocks that pay out fixed dividends, often with higher yields than bonds. Should you make room for them in your portfolio?
-
Don't Let Your Equity Compensation Trip You Up: A Financial Expert's GuideStock options, RSUs and other executive perks can come with some serious strings attached. To avoid a nasty tax surprise, you need a plan.
-
The Spendthrift Trap: Here's One Way to Protect Your Legacy From an Irresponsible HeirA spendthrift clause in an estate plan can protect an inheritance from a financially irresponsible child's debts and poor decisions.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's ExecutivesFeeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard AboutTiming is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
