Student loans have been the source of stress for many college graduates. Today the average amount of student loan debt that college graduates have is around $30,000. I can vouch for that because that’s about how much debt I graduated with. Fortunately, I’m not struggling to pay back my student loans at this point but I do sympathize with those who are struggling and I agree with many people that some type of reform needs to take place.
WHY STUDENT LOANS SUCK
The main reason why student loans suck so bad is because they will never go away. There’s literally no way to get out of paying them back. Now I don’t believe that people shouldn’t pay back their debts because I’m clearly paying mine, but I’m also not so naive that I think things will be as easy for others as they have been for me. And it’s more so the idea that you have no way out that’s so daunting. It also sucks to be in your early twenties and thousands of dollars in debt. Especially when you took on said debt to make a better life for yourself. It’s the irony of it all that makes the situation so screwed up for a lot of people. $30,000 of student loan debt can also hinder people from moving forward with their lives. You can literally Google any article about millennials putting off buying houses & cars, getting married & having kids because they are afraid to take on more debt and get themselves into a messier financial situation. It’s true; it hasn’t stopped every millennial but it’s stopped enough for news publications to take notice. And lastly, the grace period for graduating college students really isn’t long enough. It actually takes longer than 6 months for most people to find a job in their field with decent pay. I guess loan providers felt like 6 months was enough time but unfortunately it’s not anymore.
HOWEVER, there is some good news about student loans. Taking out student loans and paying them back ON TIME can help young people establish credit. It has certainly helped me; someone who didn’t even have a credit card until earlier this year. My student loans have tremendously effected my credit score in a positive way with the age and total number of my accounts. Also, student loan debt is considered as “good debt” because looked at as installment debt. It’s not the same thing as regular credit card debt, which is obviously “bad debt”. Literally the only way your student loans can hurt your credit score is if you don’t pay them. So don’t do that.
PAY OFF AS FAST AS YOU CAN
I am currently using the debt snowball plan to tackle my student loan debt. I’m paying twice the minimum payment on my loan with the lowest balance, and paying the minimums on my two others. Once I finish paying off the loan with the lowest balance, I’ll take the money that was going to that loan and apply it to the loan that has the second lowest balance. Then repeat until all loans are paid off. The reason why I chose this particular plan is because it’s motivating to watch the balance on the loan dwindle every month. Once one is paid off, I’ll be that much more motivated to get rid of the next until they are all gone. The catch for this plan is that you absolutely have to pay more than the minimum payment, otherwise you’ll feel like you’re not getting anywhere. I’ve actually overpaid so many times on my lowest balance that if I wanted to turn off Autopay, I wouldn’t have to make a payment until August of next year. I use Autopay for my student loans so that I can make sure the payment is never late and also because you get a tiny discount for using it and every bit of help you can get counts.
If you’re in a financial bind and cannot afford your student loan payments, CALL YOUR PROVIDER. Don’t just pay what you can here and there without letting them know what your situation is. Let your loan provider know what is going on with you and they may be able to offer you other options. Making late payments or payments that are less than the minimum is just going to hurt you. If you’re unemployed, they may offer your forbearance. You’ll still accrue interest BUT you won’t have to make a payment until your forbearance period ends. If you are employed and still can’t afford the minimum payment, they may offer you a graduated payment plan or income-based payment plan. But no one can offer you anything if you don’t let someone know that you need help.
IF YOU’RE STILL IN/ABOUT TO GO TO COLLEGE
If you can, try to pay down some of the accruing interest while you’re still in school before it becomes capitalized. When I first got notice that it was time to start paying back my loans, I was ASTOUNDED by how much of the loan was interest. Seeing that it was capitalized when I graduated as disheartening too because if I had paid attention, I could have paid off all of the interest and been left with just the principle. But you live and you learn. It’s highly unlikely that anyone will do this but it will cut down on your payment and the length of your loan if you can. Also, don’t take on more student loans than you actually need. When I was in school, I was getting just enough to cover tuition, fees and some books. If you’re taking more loans than you actually need, you’re really just making it harder for your post-college self to pay back your debt. Lastly, do everything in your power to land a job before you graduate or very soon after. I was doing temp jobs as an administrative assistant before I graduated and those two and three-day assignments turned into three-month assignments as soon as I graduated. My last three-month assignment turned into a permanent full time job. Trust me, that six-month “grace period” will be over before you know it and if you’re still trying to kick back and enjoy your summer while unemployed (or underemployed), you’re going to be blindsided by the student loan bill.