How to Manage Student’s Debt

Students depts - how to manage with them
Did you just get out of college or graduate school? Congratulations; you have a bright future ahead! However, you also need a reality hit: someone needs to cover the student loan debt. That someone is, of course, you.
The debt is an amount of money you’re not able to repay at once. This means that you probably won’t be able to buy a home right after graduation if you’re dealing with college debt.

You need to be realistic about the situation, but you should never despair. Just like millions of other graduates manage their debts, you will do the same. You only need the right approach, and we’ll tell you all about it.

1. First, calculate your total debt
This is the hardest part. You will be overwhelmed by the full amount of money you owe, but you do need this information in order to make a plan. Did you take numerous loans to pay for your studies? Many students take both private and federate loans, so it’s necessary for them to do the math.

2. Inform yourself about the grace period

The grace period is the period of time before you have to start repaying your debt. You’re not obliged to start making monthly payments as soon as you graduate. Federal Stafford loans, for example, have a grace period of six months; whereas federal Perkins loans allow nine months to pass between graduation and the first payment.

It’s important to understand when you’re supposed to start making monthly payments, so you won’t miss the first one. Needless to say, you need to use the grace period as wisely as possible. Don’t just ignore the debt until the obligation for the first monthly payment arrives. Use this time to make a clear plan and get a job.

3. Think about debt consolidation
Debt consolidation is the procedure of combining several unsecured debts into a single loan that will be easier to manage. This means that you’ll take out a new loan to pay off the entire debt from your studies, and you’ll have a clear monthly payment to handle.

4. Understand your repayment options
Federal loans have a default repayment plan of 10 years, but the standard plan is not the only option you have. If it’s difficult for you to go repay the full amount over 10 years, you can change the plan and extend your repayment period. This way, you’ll pay a greater amount of interest, but the monthly payments will be lower.
You can choose between five types of plans:

      ● Standard Plan
      ● Extended Plan
      ● Income-Sensitive Plan
      ● Income-Driven Plans
    ● Graduated Plan

If you opt for an income-driven plan, you’ll have four options to choose from: revised pay as you earn; income-based repayment plan; pay as you earn; and income-contingent repayment plan.
Private loans are not eligible for these plans, but you should inform yourself whether or not your lender offers different options.

5. Learn how to budget
Now that you probably have a job, you might be tempted into finding a nicer apartment and buying fancy furniture. Try not to do that during the first years after graduation. There’s nothing wrong in living a simple life.
Skip the pricey dinners and expensive clothing stores. Use public transportation and walk whenever you can. Whatever you can do to save money – do it!

When you finally repay the loan, you’ll be free to organize your budget in a completely different way, which allows you to enjoy life to the fullest.