You've graduated from college. For many graduates, now becomes the time you'll have to pay for that high-level education. All those student loans you took out while studying economics, philosophy, and engineering, are soon to come due. Those payments will not wait.
Moreover, you have to repay your loans regardless of whether you've nabbed a high-paying job after graduation or can only find a position filling coffee cups at the nearest coffee shop.
You, of course, can help ease the sting of loan payments by learning about your repayment options. A bit of research can help keep your budget healthy as you begin paying back your student loan debt.
The burden
The first step? You need to understand how much money you'll owe once you graduate. You'll need to do this before you graduate. Fortunately, you can find out by logging onto the National Student Loan Data System. This database lists all the federal student loans you've taken out. It also lists how much debt you owe, including interest.
These figures might come as a shock to you, but it is better to know the debt burden you are facing. This way, your student loan debt will not be as much of a surprise when those first bills start arriving.
Who to pay?
Next, you need to determine whom you'll pay when your student loans are due. For federal student loans, this will be a loan servicer.
The U.S. Department of Education assigns a loan servicer to graduating students after their entire loan amount has been paid out. You can find information -- including contact numbers and mailing addresses -- for your loan servicers at the National Student Loan Data System online database. You will need your Federal Student Aid PIN to gain access to this important loan information.
Don't forget that you are responsible for making your loan payments on time, even if you do not receive a bill. If you do not make your payments on time, you'll face late fees and a hit to your credit scores.
Repayment options
Once you know how much you owe and whom you'll pay, you'll need to choose a repayment plan. This is a big decision, and you might want to spend some time researching it. Your decision should hinge on your current employment and income.
Most graduates choose a standard 10-year repayment plan, meaning that they pay off their student loans by making ten years’ worth of monthly payments. However, this is far from the only option.
Some graduates might instead sign up for the Income-Based Repayment or Income-Contingent Repayment plans. These plans are better suited for those students who have not yet found a steady, well-paying job. Instead of requiring the same payment each month, their minimum monthly payment rises or falls depending on the graduates' ability to make their payments. Such programs provide flexibility for graduates still trying to find that right job.
Budgeting
Once you graduate from college, it is time to learn the important skill of budgeting. This is especially important for students who are repaying student loan debt.
You need to learn that you do not have unlimited financial resources. Moreover, you have to learn how to allocate your money properly. If you are earning barely more than minimum wage, you'll struggle to pay your student loan bills on time if you are spending all your extra cash on Thai food and movie rentals.
Sit down after you graduate and spend the time to create a realistic budget. Make sure that you set aside money for fixed expenses such as monthly rent, car loan payments and, of course, your student loan bills. Make sure you also craft realistic line items for costs that can change from month to month, such as entertainment, groceries and transportation.
Budgeting is a crucial skill, especially for recent graduates who have not yet had the time to build up a financial cushion. If you can master this skill, you'll be developing the tools you need to forget a sound financial future.
Facing those student loan bills after four years of college life is never an easy task. However, you can ease more smoothly into the real world of bills and financial responsibilities if you do the research on how these loans work. The key is to spend the time to educate yourself on your new responsibilities.