Tips for managing your student loans
- Make sure your future career is worth the debt you are going to owe once you graduate. Be disciplined enough to do everything you can to avoid loans. Don’t go to that big state school or private school all of your friends are going to if you know you will have to pay for it all with student loans. Opt for a school with manageable tuition even if it isn’t your dream school. Work your way through college. These kinds of choices can be tough to make, but don’t just go for the easy or most desirable route. By making a prudent decision that may be harder in the short run, you’ll be giving yourself a life education in addition to a college education — and saving yourself a lot of difficulties later.
- Please be honest with your kids if you can’t afford to contribute to their tuition. They will ultimately respect you for refusing to take on debt that you cannot reasonably manage.
- If you do take out student loans, take the time to understand them as thoroughly as possible. Do your research. Understand which ones are subsidized as opposed to unsubsidized, federal as opposed to private, and what exactly that all means in terms of interest and repayment.
- Make sure you are set up with online accounting for your student loans, so you can easily and conveniently track the total amount due and what the interest rates are anytime you need (even if you’re still in school).
- Know your options for repayment. If you’re just getting ready to start making payments on your student loans, call your loan servicer and find out what kind of payment plans are available to you. There are many options! In the next section, I’ll be discussing several of them.
- Do not apply for deferment or forbearance unless you truly can’t afford to make payments on your student loans. If you do have to defer, keep making your interest payments.
- Put yourself on a strict budget and make repaying your student loans a top priority. Even if you get a great job right away after college continue to live like a student and make double payments if you can.
- Whenever you can pay extra money toward your student loan balances. Now is not the time to sit back and relax. Work double shifts, get a second job — be willing to do whatever it takes to give yourself a solid head start on life. Future you will thank you.
- When filing taxes, make sure to deduct your student loan interest. Doing so can reduce your taxable debt by up to $2500.
- Avoid debt in other areas that would cause you to take longer to pay off your student loan debt. Financing a car and racking up credit cards debt will totally halt the process and end up costing you way more in interest. The one exception to this is buying a house.
The catch-22 is that folks with student loan debt often use that fact as a reason not to buy a home. But a home is an asset, not a liability. Every month you pay rent, you could be using that same amount paying your own mortgage and building equity in an asset (instead of “investing” in your landlord’s asset).
If you are on track with your payments and want to buy a house, there’s no reason having student loan debt should prevent you from doing so. Go for it!