Hey, College Grads: Your Student Loan Repayment Clock Is Ticking

NEW YORK (MainStreet) -- New college graduates get a grace period before starting to bear the burden of all those student loans officially. But that six-month cushion is now disappearing.

Loan repayments should start triggering on or around December 1, and graduates need to be ready to start writing checks and organizing payments.

Right out of the gate, the average monthly student loan payment is hefty, at $242 per month, according to Brookings.

Consequently, if you're not ready to pay off that debt right away, that figure will grow exponentially and put you in a financial hole just when you're trying to get your professional life starting.

So don't let that happen - get out front of your student loan debt and be prepared to start paying it off right away.

Jodi Okun, founder of College Financial Aid Advisors and Discover's student loans brand ambassador, says one big key in being ready to roll with your college loan payments is to assess and organize your finances.

"Understand the impact your starting salary will have on your ability to make monthly payments toward loans," Okun says. "Also, create a document that outlines monthly expenses, and set a reminder for payment due dates."


Another "prep step" for new college grads is to seek out resources for student loan payments, Okun adds. "Use existing resources to understand repayment options and how much you'll owe on loans each month," she says. "Discover Student Loans, for example, offers a few calculators to help borrowers map out repayment plans."

Whitney Hansen, a professional financial coach in Boise, Idaho, specializes in teaching younger clients how to pay off debt. She should know, having paid off $30,000 in student loans within ten months.

"The key in doing that is to continue to truly live like a college student a little while longer," Hansen says. "Most college students lived on less than $15,000 a year. Continue living like a college student for another year or two until you get the debt paid off."

Hansen advises graduates to get an additional part-time job and put all of the extra money toward paying off debt. Also trick yourself to stay focused by taping a miniature copy of your budget to your debit card. "You'll be reminded of your commitment to get out of debt every time you want make a purchase," she says. "It's a pain to remove your budget in order to swipe your card - but that's the point."

Another good tip - don't add to your overall debt burden, which it makes it that more difficult to handle new student loan debt.

"One thing not to during your six-month grace period is overextend yourself with fixed payments," says Joseph Orsolini, a financial aid planner with College Aid Planners in Chicago. "Before signing on the dotted line for an apartment, car payment or cell phone plan, develop a budget that includes your student loan payment.

"Too many grads commit their paycheck to fixed expenses during the grace period and are hard-pressed to fit in a student loan payment when the grace period ends," Orsolini added.

 
Grads should also contact their loan servicer and look to set up an auto-debit for their payment. "Not only will this service reduce your loan rate by .25%, but it will also help make sure that your payments are made on time," Orsolini said.

Often, it's simply handling the basics to get your student loan repayment program firing on all cylinders.

"First, find out exactly who you have to pay and how much," says Kevin L. Matthews II, a financial advisor at Capital One in New York City and a college graduate who has paid off 50% of his student loan debt three years after graduating. "Also, depending on what type of financial aid package you received, some payments may have to be sent directly to your school while others go through a third party."

Matthews also advises paying more than the amount on the bill. "Just like a credit card, pay more than the minimum," he says. "Make double payments if you can. When I had a few extra dollars in my budget I would make extra payments on my loans to retire the debt more quickly."

Bottomline: Don't get behind the eight ball with your student loan payments. Plan ahead, be aware the clock is ticking, and take a few solid steps to start paying off the loan on your terms and nobody else's.

College loans are a burden, but they're not there forever. Shorten the timeframe by acting now to get ahead of your student loan debt.

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