I still vividly remember the day when everything changed. It was a beautiful spring day near the end of my last semester of college. My friends had all gone to a meeting on student loan debt with the financial aid office. During this meeting, they all found out the total amount of student loan debt that they had accrued during college. People came out of that meeting shocked and scared, fearful that they would never be able to pay back all of the debt that they had amassed. I had never seen so many of my friends in tears. The secret was out.
Up until that day, I was able to live blissfully unaware of my student debt. Once a year, I decided how much money to take out in loans and I submitted the request to financial aid but the money never seemed real. Most days, it seemed like I was just able to go to college for free. Even though I took out significantly less debt than the national average for college students, received scholarships, and worked during college, it still felt like a slap in the face at the end of college. I do not regret my college experience or taking out all of those loans, I think that the money was well worth the education. I just wish that there had been more effort on the part of the institution and the loan lender to educate me on the loans that I was taking out. Student loan debt is the best-kept secret in higher education.
This experience at the end of college was a wake up call for me. During graduate school I did everything that I could to limit the amount of additional loan debt that I took on. I solicited scholarships, worked, and lived as frugally as I could. In some ways, it was nice that many of my friends from college, who were not still in school, were making their first loan payments and beginning to feel the pinch. I carefully evaluated my loans on at least a bi-annual basis. During my final semester of graduate school, I calculated my payments and began formulating a repayment plan that would allow me to pay my loans back in a few years rather than a decade. I say all this not to brag about my preparedness but rather to encourage you to learn from my mistakes. Here are a few tips about student loan debt for different stages in your educational experience:
- Students: Be aware of how much debt you have already accrued and how much you plan to accrue during your time at school. Create a budget so you know exactly how much loan money to take out. Don’t hesitate to return extra loan money, any money that you return is money that you don’t have to pay back later. If you can, pay the interest on your unsubsidized loans while you are in school. For more tips on how to minimize your student loan debt while in school, check out this article.
- Graduating Students: If you are graduating soon, take stock of your loans. Check in with your loan lender(s) about the total amount that you owe as well as possible repayment plans. While the exit counseling that you receive will be helpful place to start, check out your lender’s website for all of the details on possible repayment plans as well as capitalization options. Begin forming a plan to repay your debt, focus on paying down the loan with the highest interest rate first. Keep this plan in mind as you are looking for jobs and considering where you will live.
- Recently Graduated Students: Begin repaying your loans during grace period! Don’t wait until repayment! Any money that you can pay towards your loans prior to repayment can help pay down your accrued interest as well as the principle. This practice was particularly helpful for me because I was able to get in the habit of paying off my loans before my grace period ended, so I had no surprises during repayment. If you can, register for auto pay with your loans. In some cases, this can even reduce the interest on your loans.
- Those Repaying Student Loan Debt: Make loan repayment a priority. Continue to modify your repayment plan as your income changes. When you get a raise at work, receive a tax return check or save money after moving to a cheaper apartment consider putting all or most of it towards your debt. Celebrate the small achievements, reward yourself for each loan that you repay. If you have trouble making your loan payments, contact your lender. They want you to pay back your debt and have many options in place to help you.
I hope that these tips are helpful and that you are able to learn from my experience. Student loans can be daunting, but being prepared can help you face the reality of your loans with a plan of attack.