Managing Student Loan Debt – A Guide for New Grads
Okay, so maybe you’re not a new grad. Maybe you’re a recent college grad. Or, maybe you’re a freshman, newly in debt with a student loan. Regardless, you need a plan.
What new money habits do you need to develop? That depends. Have you been financially dependent on your parents? Did you have a job while you were in college? Do you know how to manage your own money? Did you – or will you – graduate with student loan debt? Do you have a full time job post-graduation? What are your aspirations and dreams? What do you value in life?
Grads, You Need a Plan
FIrst, let’s start with managing your money. You should know how to manage a checkbook; save a portion of your income; and, manage a credit card. Then, you should learn how to make a spending plan, also known as a budget. In addition, you should identify your values and goals, and connect your spending and saving habits to these values and goals.
Finally, you should develop a plan for paying down student loan debt. This can be daunting and you will likely want to avoid the task. Here are some resources to get you started.
- Federal Student Aid – A guide to repaying your federal student loans. This guide is from the Department of Education. You’ll find information about the right repayment plan for you; instructions for making a payment; what to do if you can’t afford your payment; and, information about loan forgiveness, cancellation, and discharge.
- Top 10 Student Loan Tips for Recent Graduates – whatever you do, do NOT ignore your student loan. Check it regularly and if you can, pay extra on the loan(s) each month.
- 15 Ways to Pay Back Student Loans Faster – excellent tips from the site WiseBread – Living Large on a Small Budget. Ideally, make a plan before you graduate. Once you get a job, you employer might agree to pay some of your student loan debt.
- A Beginner’s Guide to Repaying Student Loans – an excellent article with links to other resources, written by Ron Lieber, ‘Your Money’ columnist for The New York Times.
But first, let’s pause for a minute and understand the psychological factors that will influence your success in managing student loan debt.
- What do you believe about money?
- How do you think about saving, spending, and earning?
- What emotions do you notice when you think about money?
- How can you form good money habits? Here are some examples: Make a weekly date with your money. Set up a system for paying on time. Celebrate the wins, large and small.
Imagine the future you. In five years, where will you be living? What job will you have? What leisure activities will you be enjoying? Will you be in a relationship? Have kids? Finally, connect your money goals and habits to this future you. Ultimately, saving well and spending wisely will be more enjoyable when you can imagine the happy and financially savvy person that is the future you!