As we approach graduation season, thousands of college graduates will be turning the page in their book of life. No longer do they have the responsibility of ‘studying’ each and every night (of course), or deciding whether to eat at the campus buffet, or the local Chick-fil-a. They are now thrown into a different world and must immediately begin making very important decisions that will impact their long-term financial success.
One of the most important decisions that a college graduate has to make is how to strategically repay student loan debt. Fortunately, there are many viable options.
The federal government alone provides 7 different options:
- Standard
- Graduated
- Extended Fixed
- Extended Graduated
- Pay-As-You-Earn (PAYE)
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
Not only does the federal government provide multiple repayment options, but, over the last few years, there have been many private companies that will now refinance, consolidate, and offer their own repayment plans.
So as a new graduate, who can have anywhere from a new car’s worth to a new home’s worth in student loan debt, how do you determine the option best for you?
- Exit Counseling: At the very least, make sure you spend a few minutes with your college’s or university’s exit planning counselor. They can, hopefully, walk you through each of those various options and how they will play out based on post-grad job options.
- Online Resources: There are also a number of online ‘student loan repayment estimators’ (type that in google, and you’re welcome) and calculators that can help you run some scenarios.
- Personal Planning: Then, if you really want to get ahead of your peers and avoid the post-grad financial problems that so many suffer from, call me J, or work with a financial professional who understands how student loans will impact your personal financial life as a whole.
By taking out student loans, you have invested in the betterment of yourself and your income potential. Student loans can be the elephant in the room, but they don’t have to be a burden. With the proper planning, you should be able to enjoy life, save money, and pay off that debt within a timely manner.