5 Steps to Taking Control of Your Student Loans Right out of College


By Bianca Flowers

Congratulations! You’ve soldiered your way through many restless mornings studying for final exams and now those restless insomniac nights are behind you. While you may be filled with anticipation to dive head on into your career phase, or already have a couple of years of work experience under your belt, if you’re like most Americans, student loan payments inevitably loom.

According to the Federal Reserve Bank of New York, the average student in the Class of 2016 racked up $32,172 in student loan debt. With more than 44 million borrowers, student loans can be a bruising burden--hindering your ability to build wealth and taking an untold number of years until you’re free of Sallie Mae.

Whether you’ve recently graduated, are taking a break from school or have already started paying off your loans, there are a few conventional strategies to ensure you’re on top of managing your debt.

1) Know Your Loan Provider & Stay in Touch

The very first thing you should be aware of as a borrower is who your lenders are, whether it’s private or federal loan providers. It’s important to be in touch regularly with your lenders since part of their role is to aid you in establishing a financially feasible plan to pay off your loan. Whenever you move, change your number or any personal information, be diligent in updating them on your whereabouts. Ignoring bills, albeit unintentionally, can lead to defaulting which can have severe consequences on your credit in the long run.

2) Know Your Grace Period

Once you have a handle on the specifics for your loans, knowing the grace period is crucial. A grace period is the amount of time you have after graduating before you have to make your first payment. Depending on the type of loan, each grace period will be different. Most federal loans, such as the Stafford loans, have a six-month grace period while Perkins loans are a bit more generous and give you nine months before you have to start making payments. Private loans don’t have a standard grace period because it’s governed under a private loan agreement between the lender and borrower.

3) Explore Repayment Plans That Are Right For You

When your grace period is up, your loan payments will automatically default to a standard 10-year repayment plan. Now, you may think there’s no way you’ll be able to pay off your accumulated debt in that time span on a $50,000 a year salary. Don’t worry. If you aren’t making hefty six-figures, there are a few income-based repayment options that are intended to be affordable based on your budget.

4) Prioritize Loans

Each loan comes with different rates and it’s a good rule of thumb to always pay off the most expensive ones first. This will alleviate the total interest you’ll have to pay overtime.

5) Consider Consolidation

A consolidation loan combines all of your federal loans into one for a single monthly payment and one fixed interest rate. As appealing as it sounds, there can also be some downsides to student loan consolidation. “When you consolidate certain types of loans, you might accidentally disqualify yourself for certain types of student loan repayment programs,” said Robert Farrington, founder of TheCollegeInvestor.com. “It's not a solution for all borrowers and it can even make things worse.” So, if  you aren’t sure about whether interest rate on a consolidated loan will be more favorable to you, be sure to check out loan terms before signing up.

While student loans can seem endless and exhausting, knowing a few basic “how-tos” can be extremely valuable for making them more manageable to pay off.