You’ve just graduated from college and are ready to take on the world. Six months later, the first bill arrives and it’s time to repay your student loans. Approximately 45 million Americans are in your position. Student loan debt doubles credit card debt in the United States, putting a financial strain on our nation’s recent graduates.
There are ways to manage this debt. Focusing on the principle amount is daunting but that’s the wrong way to look at it. If you were climbing a mountain, wouldn’t you prefer to take the journey one step at a time instead of focusing on how far you are from the summit? Paying back your student loans is similar. Focus on making your payments month-by-month rather than the full loan balance.
The internet is full of great resources for managing your student loan debt. Here are a few suggestions:
- Never miss a payment. A great way to make your student loan debt problem worse is to ignore it. Ignoring your student loan debt can cause delinquency and default. These consequences leave a substantial impact on your credit.
- Know the alternatives. Contacting your lender if money is tight is a smart idea. The lender may offer to place your loans in forbearance or deferment that allows you to bet back on your feet. Your lender can also offer to modify your repayment plan based on your income. The only requirement is that you pick up the phone, so the lender can work with you to accommodate your situation.
- Beware of the interest Higher-interest loans are more difficult to pay off quickly. They can also make it feel more difficult to put a dent in the principal balance. Targeting your payments to these loans first is a great strategy for making your loan debt feel more manageable.
Similarly, loans in forbearance or deferment still accrue interest. It’s a good idea to pay the interest on these loans even though it’s not required because it will keep your total loan balance down.
Student loan debt is unfortunately the price you and millions of other people pay for their education. With a sound strategy for repayment, managing your debt is easier than you think. The worst thing you can do is allow your loans to become delinquent or enter default status but repayment of your loans can boost your credit score over time. The only way to make this problem better is to face it head on and one monthly payment at a time.