How to Pay Off Student Loans

Posted by on in Life Transitions

Almost every college graduate has to deal with this, and we are not talking about finding a frame for your diploma. We are talking about paying off student loans. Unfortunately, attending college can cost a lot of money, and not every student finds helpful scholarships or receives grants or financial aid, which leads to many students taking out loans to cover their costs. When you take out a student loan, you need to understand that you will pay back more than what you initially borrow. As time passes, interest accrues to your loan, so you will pay back the amount borrowed in addition to the interest.

You also need to realize that paying off your student loans can take a long time, depending on how much you owe. Your repayment period can last anywhere from a couple of years to a decade. If you decide to go to grad school, expect that period to grow longer. Ultimately, there are several factors that will determine how quickly you are able to pay off your loans. As a recent graduate or as someone preparing to graduate, you should be aware of much you owe and what the estimate is for your repayment period. After you graduate, it is your responsibility to manage your money and make a budget, so you need to know this information in order to avoid overspending and piling up more debt. Below are useful steps and tips to help pay back student loans.

Steps to Paying Off My Student Loans


Every student leaves college with a different amount of debt and in a different situation, whether that means you plan to move across the country for a job or move back home with your parents for a bit. Either way, paying off your student loans takes time and is a process for every recent graduate. This does not mean you cannot begin paying off your loans early and get ahead of schedule. In order to help you pay off your loan amounts, here are some guidelines to start tackling that debt.

Step One: Know how much you are going to have to pay back. It is very likely that your school will offer a seminar toward the end of the semester on how to handle paying off your loans. If you have taken out private bank loans, then you will need to contact the bank to get the total amount you owe that particular organization. After you know how much each loan is, you should add everything up to learn how much, in total, you are going to owe. You can usually also find this information online, depending on your loan provider, with your account information.

Step Two: Learn about your different payment options. Almost every organization that offers student loans has a few different loan repayment options. In fact, many organizations defer your repayment period for the six months following your graduation in order to give you time to get on your feet. Use this grace period to determine which repayment option you are going to follow. Typically, if you are on a tight budget, you will be able to set up plans based on how much you make.

Step Three: Figure out how much you actually owe every month. After you have chosen the best repayment option for your situation, it is time to figure out how much you are going to have to pay every month. Often, steps two and three go hand in hand, but it is important that you know exactly what is expected of you. You should also keep in mind that some loans will not have a monthly payment, but you will instead have to pay every other month or some other payment schedule. Be sure you understand and know when your payments are due.

Step Four: Determine how much you can afford to pay toward your loans on a monthly basis. Just because your loan payment is a certain amount does not mean you cannot pay more. For instance, if you owe $200 every month, but your monthly income allows you to pay $250, then you should pay the $250. The more you can afford to pay towards your loan now, the less you will ultimately have to pay over time. Many do not consider the fact that interest keeps on accruing the longer you owe money. Therefore, it is in your best interest to get your loans paid off as soon as you can.

Step Five: Pay. Pay. Pay. Once your grace period ends and you have determined your monthly payments, it is time to start paying. However, if you are in a financial situation that allows you to begin paying off your loans before your grace period is over, start paying. You will avoid additional interest, thereby avoiding more debt.

Budgeting After College


Making a budget is one of the most responsible things you can do for yourself, especially after graduating. For some of you recent graduates, making a budget may be something new. Budgeting your money means you understand how much money you have coming in (income), and how much you have going out (fixed and variable expenses). This information is necessary when you begin to pay off your loans and enter the working world. As someone preparing to graduate or someone who recently graduated, you may not know exactly what your income is, but it helps if you have a rough estimate. Here are some things you need to know before you sit down to make your monthly budget.

Income: The first thing you need to know before you even begin making your budget after college is your monthly income. Knowing the amount of money you are going to be making on a monthly basis will help determine how much you can afford in terms of expenses. If you are unsure of your monthly income, then you need to estimate it or estimate how much you can afford based on the amount in your savings account.

Expenses: The second thing you need to do is determine the total amount of fixed and variable expenses you have in a given month. Fixed expenses are those that will not change from month to month. For example, your loan payment and your rent are fixed expenses. Variable expenses are those that will change from month to month. The amount of money you spend on gasoline and eating out are both variable expenses. As you are totaling your expenses, you need to consider your fixed expenses first and then estimate your variable expenses.

Loans: It is extremely important for you to include your loan payments in your budget. The best way to get your loans paid off in a timely manner is by including them in your monthly budget plans and to pay back as much as you can.

Save, Save, Save: If your budget and monthly income allow it, you should consider saving money as often and as frequently as possible. By doing this, you will have money in case of emergencies, and you will begin saving for your future.

Job Options After College


After you graduate college, you have to enter the working world, which could present more of a challenge than you ever expected. Just because you have earned your degree, that does not mean that job opportunities are going to fall in your lap. In fact, many recent graduates will most likely end up being underemployed. Underemployment typically refers to part-time jobs and internships, work that will not necessarily leave you rolling in the big bucks. However, underemployment is better than unemployment, as any job will offer you experience and potential references. You will also not have any gaps in your resume, something that many employers are wary of when scanning job applications. In order to make the most of your underemployment after college, here are some things to look for when applying to jobs right after college.

Income: Look for work that guarantees a living wage. You may be underemployed, but you will still have bills and expenses to pay, especially if you are living on your own and have not moved back in with your parents. So, when scoping out job postings, see if an hourly wage or salary is listed so that you have an idea of the kind of work you can realistically take on.

Relevant Experience: If you decide to take an entry-level position or an internship, it is important that you receive relevant experiences that will build your resume and eventually provide you with more job options after college. These experiences could come from observation, hands-on experience, or simple instructions. Either way, be sure your underemployment job is going to be relevant to your goals.

Benefits: While many underemployment job opportunities will not include benefits, you might want to consider positions that provide you with sick days, bonuses, or paid overtime. Remember that you do have a college degree, and there are plenty of relevant jobs out there for you.

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