Heading off to college can be an exciting time in every young person’s life. What’s not so exciting though is the financial obligation that comes along with it. While taking out student loans to assist with paying for your education may seem like the best option for getting through school, being knowledgable about how to manage them is even better. Here are what a few experts had to say about managing your loans before, during, and after college so that you don’t end up with regrets:
Being prepared for college includes knowing your financial options, too. Don’t get tricked into thinking that taking out a massive loan is your only option for education.
Do your research. Research student loan options — from both private and public sources — and figure out which type suits your needs based on the length of your academic program, the cost of the program and where you are at financially (i.e. how much you need). Also look for grants and scholarships that can be used to offset the cost of your education. I know one student who applied for and won over $500,000 worth of scholarships – she actually didn’t end up using student loans after all. Some loans are tied to grants but require separate applications make sure to apply for both. For minorities and women of color, there are quite a few programs that offer financial assistance — make use of all of these programs. — Keisha Blair, Economist and Personal Finance Expert
One of the most critical times that you should be paying attention to your student loan activity is during college. Contrary to popular belief, it’s more important at this phase to understand the financial decisions you’re making than it is post graduation.
Know what you’ve borrowed and who you’ve borrowed it from.
Finding relief in your finances after college doesn’t have to be a myth — even if you have student loans. Get to know your money and be open to taking different paths to repayment.
Create a budget. Whether you use a simple spreadsheet, or a more sophisticated tool like Mint.com, Quicken, or YouNeedABudget.com, get a grip on what your actual take-home pay will be against your expenditures, which will obviously include your student loan. This is reality check time. Will you need to consider federal loan consolidation or a student loan refinance to better manage your debt and put breathing room in your budget? Should you consider an income-driven repayment plan to help? Or depending on your career and employer, will you qualify for loan forgiveness? If you’re one of the lucky ones, you’ll still need to understand how much of your debt will realistically be forgiven—and when. This means you’ll still have to make a certain number of qualifying payments before the forgiveness even kicks in (i.e. you’ll need a budget WELL before you can say goodbye to those loan payments). — Anita Thomas
Develop a repayment action plan. With a repayment action plan in place, you will know what to expect when that first student loan invoice comes due. The important action step is to understand the true cost of your student loans, and how interest accrues. Then, you can evaluate the various options available to student loan borrowers such as student loan refinancing, federal student loan consolidation, federal student loan income-driven repayment plans, teacher-student loan forgiveness and public service loan forgiveness. — Zack Friedman
Consider refinancing your loans if it makes sense. The amazing thing about today’s market is there are a number of companies that allow you to refinance student loans with high rates. If you meet certain qualifications, you can change rates on a loan that was once charging 8% in interest to be 3%. — Marshay Clarke
Approach your debt payoff like a budding entrepreneur. If family and friends offer you gifts for your birthday or graduation set up a bank account and tell them you’d prefer if their gift helped you pay down your student loans. Shortly after his graduation from college and after he proposed to his future wife, one of my personal mentors (and CEO of a NYC firm) got sponsors for his wedding! Approaching your debt pay-down like an entrepreneur will set you on a path to long-term success. — Keisha Blair