They might have earned a college degree but a majority of college graduates do not feel adequately educated about personal finance topics. When you consider that the average student from the Class of 2016 graduated with $37,172 in student loan debt (up six percent from the previous year) this is a glaring hole in their education. Do they really understand their options like forbearance and deferment? And what if they are gainfully employed but still not making enough to pay back their loans?
If you are graduating this spring, you don’t have to start paying back your student loans for 6 months. It’s easy to forget about them when the time rolls around so create your plan now! As a new graduate, you will have various new expenses. These may include a professional wardrobe (t-shirts and shorts may not cut it!), transportation to your new job, housing, a gym membership (no more campus recreation for your) and the list goes on. Create a budget to schedule all these new payments and include all upcoming student loan payments!
If you happen to have some extra cash from time to time it is smart to pay down your student loans. It will cut your overall interest costs and the length of your loan. Review your budget and all your expenses every month. This will allow you to know when your bills are due ensure you pay them on time. It will also show you where you can cut down expenses to create that extra money at the end of the month.
If you still haven’t found that dream job and are underemployed there are other options to postpone paying back loans which are called deferment and forbearance.
- Deferment allows you to stop making payment and doesn’t accumulate interest. You are able to qualify for deferment if you are enrolled at a postsecondary school at least part-time, unemployed, serving in active duty, and more.
- Forbearance allows you to either stop making loan payments or have reduced payments for a certain amount of time but interest will still accumulate. You are able to get forbearance for a number of reasons including unemployment, reduction in work hours, life-changing circumstances, or poor health.
It is important to make your student loan payments on time, every month. There can be serious consequences if you don’t. There can be late fees, interest charged, damage to your credit score and even confiscation of your tax return or the inability for you or your children to take out future student loans. The consequences are severe.
The financial aid government site can be hard to process and you might miss some important information along the way. Credit Advisors Foundation is certified in student loan counseling and can help you make that initial budget. Don’t hesitate to reach out to get help! We are there every step of the way and want to make sure that you have all the information you need during this new chapter of your life.
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