7 Tips for Managing Student Loan DebtBy First IB on June 27, 2016
The prospect of repaying student loan debt can be daunting. According to Student Loan Hero, graduates from the class of 2016 are leaving school with an average of $37,712 in debt, as they start to navigate life after college. If you are one of the 43.3 million Americans with college loan debt, we have a few tips to get you started — or keep you on track — for repaying those loans!
- Establish a college repayment fund. Set up an account to which money is transferred automatically. The automatic transfer forces you to save, and removes some of the temptation of spending it. Avoid using your checking or savings account, and be sure this account is for loan repayment only.
- Make larger, or more frequent, payments. By paying a larger portion of the loan each time a payment is due, or paying every two weeks instead of monthly, you are reducing the principal amount more quickly. This results in paying less interest over the life of the loan. Even making small extra payments whenever you are able can make a big difference.
- Choose the best repayment plan for your situation. If possible, avoid opting to pay only the minimum each month. According to Credible, if you chose an income based repayment strategy, 10-20% of your income will be dedicated to the repayment of your loan.
- Plan ahead, make sacrifices, and delay instant gratification. Keep in mind that any sacrifices you make to pay off your debt are only temporary. Consider cancelling cable or not eating out as much and allocate that money to repaying loans instead.
- Create a 3-5 year plan. Sit down and make a plan for paying off your loans in a manageable period of time. Also, be aware of the grace period(s) on your particular loan(s), and consider paying the interest during that time to prevent an accumulation of debt.
- Research consolidating and refinancing options. The goal of this is to combine all loans into a single loan with one monthly payment, and a lower interest rate. While this may not be feasible for everyone, research the options available before moving forward.
- Ask your employer. When negotiating salary with your employer, inquire whether the company will assist in paying off student loans. Sometimes employers that pay lower salaries will compensate by making a one-time loan payment.
At First Internet Bank, our mission is to help you manage your money more easily and to empower you to make smart financial choices. Don’t hesitate to call us toll-free at 1-888-873-3424 if you have any questions about your loans, or where to start in the process of repaying them.