Kanye West’s commencement speech is old news (yes, he really gave one), and our nation’s nearly 4 million college graduates are, hopefully, on the road to somewhere. Whatever path they might be on, chances are that almost 70 percent of them have student loan debt. If you are one of them, here are five important things you should know about managing your student loans:
1. Know your loans. You want to keep track of your loans like you’d keep track of a Facebook friend, your Instagram or your phone. Keep track of the lender, balance and repayment status for each of your student loans. What’s more, know your grace period. Different loans have different grace periods. You don’t want to miss your first payment!
2. Keep in touch with your lender. You’re not going to say good-bye to the friends you’ve made in college. Just like you’d let them know if you’ve moved, got a new cell phone number or a new email address, you want to extend the same courtesy to your lender. If your lender can’t reach you, it can cost you. Don’t ignore them. Lenders’ jobs are to work with borrowers.
3. Choose the right repayment plan. Remember, you have options. If the 10-year repayment plan becomes too much of a burden, you can change plans. Check out options such as Income-Based Repayment and Pay as You Earn. These income-driven plans cap your monthly payments at a reasonable percentage of your income. If you’re not certain what your best option is, see suggestion #2.
4. Keep Calm and Carry On. At some point, you may hit a bump in the road. Unemployment, health issues and other unpredictable crises can bring on financial stress. You’ve got legitimate options. You can postpone your federal loan payments through deferments and forbearance. Again, see suggestion #2.
5. Don’t Do Something Stupid. Don’t default on your loans. Ignoring them can have grave consequences that can haunt you for the rest of your financial life. For federal loans, default kicks in after nine months of non-payment. Also, keep in mind that declaring bankruptcy will not relieve you of your loan obligations.
Like any other life event, paying for college involves planning. Managing your college debt doesn’t have to be stressful. Have a budget and hold yourself accountable to it. Remember that you have options, and your lender will work with you. Congratulations to all of this year’s graduates. Here’s to a bright future.