Repaying loans after graduation can be a knee-knocking endeavor. Here are tips to create a solid, efficient repayment plan.
Before taking out loans, talk to an expert or someone with experience managing money to calculate how much money you will need to borrow. Then before graduation, talk to an advisor (many colleges offer them for free) to create a repayment plan.
Borrow only what you need, you do not need to be paying interest on frivolous expenses that will cripple your lifestyle after graduation.
Plan based on future expenses and lifestyle choices. Living in the real world means many added costs like car and house/rent payments--not to mention food and entertainment costs. Remember the bank of mom and dad tends to close upon graduation.
Don’t sign on for a loan that you don’t understand. Be sure to read the agreement, identify the re-payment terms and find out exactly how much you will owe and when you will be expected to start making payment.
The Department of Labor can help you predict possible salary first year out of college, it’s best to borrow less than that to finish your degree.
Use Sallie Mae’s Education Investment Planner to calculate your total monthly debt payments as a percentage of what you earn every month (or expect to earn upon graduation). This will give you an idea of how much you will need to earn and how much to take out in loans. Sallie Mae offers the following rule of thumb: “Your student loan payments are likely to be manageable if they are 10% or less of your starting salary.”
Sallie Mae recommends looking for money to finance college in this order, college savings and scholarships, federal loans, and private education loans as a last resort.
Between rising tuition costs, stagnant wages and savings and a weak jobs markets, paying for college has become a daunting task for most families and students.