If you find yourself in a lot of debt when you graduate from college, know that you are not alone. In fact, many students graduate with student loan debt and the average amount is somewhere around $30,000 to $40,000.
That is A LOT of money and you will find it difficult to wrap your head around it, especially if you do not have a job yet. Luckily for you, you do not have to start paying back your federal student loans until six months after your graduation. This means that you can look for a job and start getting paid BEFORE you have to worry about your debt.
Ready to start working on getting yourself out of debt?
Identify Which Loans to Pay Off First
If you have multiple loans in your name, work to identify which ones need to be paid down first. For instance, you want to pay down the ones with the highest interest rates even though they may be the smallest ones.
Interest on your loans can easily skyrocket the total cost of your loan and you will pay thousands of dollars over the course of the loan’s term.
Refinance Your Loans
Refinancing your student loans is a good idea, especially if you are qualified to do so. When you refinance, you will receive a lower interest rate from the new lender and this results in thousands of dollars in savings.
The first place you will see the savings is in your monthly payment and the second place is in the length of the loan terms. For example, if you pay 6.8 percent interest now and your new lender drop the interest to 3.5 percent, you will save $10,000 or more in interest payments over the course of the loan.
Before you get too excited, you do have to apply for and be approved for refinancing, which often means you need a cosigner.
Pay More Than the Minimum
One of the fastest and easiest ways to get out of debt after graduation is to pay more than the minimum amount required on your student loans. Your loan lender will send you a monthly statement that tells you how much you need to pay to keep your account in good standing. This amount is usually dragged out over 10 or 20 years.
Even if you can only afford to send in an extra $10 or $20 per month, you will find that you can cut the term of your loan in half in many cases. If you do not have the extra to send each month, send in extra when you receive a cash windfall. A cash windfall is best described as a lotto winning, a tax refund, etc.
If you have recently graduated and you are trying to get out of debt, consider the above ways to help get you out of debt quickly. You will find that if you set realistic goals and work towards them that you can get your debt paid down.