Safeload Coverage
Congratulations! You’ve officially graduated, turned your tassel, and thrown your graduation cap into the air. You’re celebrating with friends or family with cake and happiness. Now here comes the next not-so fun part budgeting for student loans after graduation.
With a little bit of planning, preparing to pay for student loans doesn’t have to be scary. Moving Help® will provide you with four tips when it comes to how to budget for student loans.
Tip 1: Gather Student Loans Details
The first step is to gather all your student loan details. You need to find out the following details:
- Your loan servicer
- Type of loan
- Your total loan balance
- Your interest rates
- Your repayment start date
- Your monthly payment
Student loans are either federal loans or private loans. If you have both types of loans, you need to know that information. If you only have one type of loan, you should know that as well.
Repayment Options
Choose from four standard repayment options:
- Standard Repayment Plan
- Income-Driven Repayment Plans
- Graduated Repayment
- Public Service Loan Forgiveness
What Is a Standard Repayment Plan?
A standard repayment plan is where you pay fixed payments over 10 years. Of course, if you save money, and you put more money toward your student loans, the faster you’ll pay them off. You could pay off your student loans in less than 10 years.
What Is an Income-Driven Repayment Plan?
An income-driven repayment plan is payments that are calculated based on income and family size.
What Is a Graduated Repayment Plan?
A graduated repayment plan is a federal student loan that starts with lower monthly payments, which increases gradually over time until you pay it off in 10 years.
What Is a Public Service Loan Forgiveness Plan?
A Public Service Loan Forgiveness (PSLF) is a federal program that forgives the remaining balance on direct student loans for borrowers who are working in qualifying public service jobs. You can check out your eligibility to see whether you’d qualify for this plan.
Tip 2: When Do I Need to Start Paying Student Loans?
You typically need to start paying students loans back six months after you graduate, leave school, or drop below half-time enrollment.
If you graduate in May, your student loan payments will begin in November or December. If you graduate in December, your payments will begin in June or July.
Some student loans might have a nine-month period, so it’s always best to confirm what your grace period is for your student loans.
Tip 3: Automatic Loan Payments
Unless you can remember every single month, you should consider setting up an automatic loan payment. In fact, when you have an automatic loan payment, you can receive 0.25 percent off the interest rate.
That may not seem like a huge percentage, but it definitely adds up over time.
Tip 4: Create a Budget
The best way to plan for student loans is to create a budget. If you have already received a full-time job after graduation, this is a perfect opportunity to create a budget.
You need to include your jobs, side hustles, and random projects that bring you income. You also need to include expenses. You’ll have some fixed and variable expenses. Fixed expenses are rent, phone bill, and student loans. Variable expenses are groceries, dining out, and entertainment.
You can create a budget using an Excel spreadsheet, another type of spreadsheet, an online budget, or an app.
Build Your Finances
While you’re paying your debt, you also should try to build your finances. It’s recommended to start with $500 or $1,000 and then work toward saving three to six months of expenses.
You also need to live within your means, especially when the cost of living can be so different between cities and states. It’s not great if you default on your loans, so if you need to cut back on eating out to make sure you can afford your student loans, that’s what you’ll need to do.
Pick Credit Cards That Reward Your Spending
About 81 percent of Americans at least own one credit card. If you have a credit card or are looking to get another credit card, consider the following factors:
- Interest rates
- Annual fees
- Rewards
- Benefits
You should pick credit cards that reward your spending. For example, if you love to travel, get a credit card for airline miles or hotel points, you should consider getting a credit card that can help with this perk.
Budgeting for Student Loans Is Possible
It’s never fun to take the time to figure out how to budget for student loans. Budgeting for student loans is important though. You can’t just ignore them. With these four tips from Moving Help, you’ll be set up for success.
If you’re moving into your first apartment after college, check out our first apartment checklist for guidance. If you need help moving, hire moving labor from the Moving Help Marketplace to make your move easier.
