You recently left college for the working world, and the freedom feels great.
Have you left college with any amount of student loan debt?
If you have, it’s important to do 7 things as soon as possible after you stop attending college classes.
(If you’ve been out of college for years and you’ve never done these things, do them now.)
1. List every debt you owe on one clean sheet of paper.
List every institution you owe money to. List your car loan and your credit card companies (if any), as well as each of your student loans.
Underneath each organization’s name, print its street address, customer service phone number, and website. Include the total balance you owe each creditor, the interest rate on each loan, and the log-in information you need for accessing your account online.
To find an online list of all your higher-interest, private, “non-guaranteed” loans, get a copy of your credit report. You can do this at no cost at this site: www.AnnualCreditReport.com.
To find an online list of all of your “guaranteed loans” including federal direct loans, go to this website: https://nsldsfap.ed.gov/nslds_SA/. To access your information on this site, you’ll need to enter your social security number, your birthdate, the first two letters of your last name, and your FSA-ID, which you likely last used the last time you applied for federal financial aid. (If you’ve forgotten your FSA-ID, you can get access using the email address you provided when you received your FSA-ID, or by correctly answering a series of “challenge questions.”)
2. If you get stuck on this, get help from your parents or from your college financial aid office.
Sorting out how much you owe and what your interest rates are (especially on “guaranteed student loans”) can be tricky.
There are three different interest rates for the three different types of government-backed loans (unsubsidized, subsidized, and Grad Plus). To make things worse and even harder to understand, the interest rate on subsidized loans has changed nearly every year. If you need help, ask your parents or your college financial aid office for help. If you’ve already graduated and left campus, don’t worry. Your college’s financial aid office will still help you, and they are available by phone.
3. Contact each of your creditors and find out exactly what your payment arrangements will be.
Whatever you do, don’t sit quietly and wait for your creditors to contact you to let you know that it’s time for you to start paying.
Don’t assume that if a lender doesn’t contact you you’ve somehow “slipped through the cracks” of the system and will never have to pay. Even if a lender doesn’t have your current address and so never contacts you about this money, you still owe it and can get in deep trouble for not paying it.
4. Don’t assume for one second that you can just not pay, and then eventually declare bankruptcy.
You’re actually more likely to get cancer or die in a car crash than to have your student loan debt discharged in bankruptcy court, so plan on being hounded to the grave for this money.
5. Plan to start paying your student loans with your first post-college paycheck.
Whether you actually graduated from college or simply stopped attending without receiving a degree, you are technically granted a six-month grace period before you absolutely HAVE to start making monthly student loan payments.
If you’re employed, though, don’t wait six months to start paying down your student loans.
Since you’ll never be penalized for paying down a student loan early, get a head start by squirreling away a large chunk of each of your post-college paychecks, preferably in an interest-bearing money market savings account through a mutual fund company.
Save all you possibly can in the first six months after you graduate (even if it means working two jobs and living with your parents or your grandma to save rent money). Then, six months after you’ve left college, you can use the money you’ve saved to make a gigantic payment on the principal of your highest interest loan.
When you do this, you’ll feel excitement and momentum to keep going and pay off every bit of your debt. Remember, your goal is not to learn to live with these onerous loan payments; your goal is to pay off all of your debt as fast as possible so that you can be free.
6. Create an aggressive plan for paying off all your student loans as quickly as possible — perhaps in as little as one to three years.
Read this inspiring article that tells how one young woman did exactly this. It’s possible — if you put your mind to it. There is no better time to do an aggressive debt payoff than before you have a spouse, kids, and a mortgage to think about.
7. Be sure you understand exactly how scary student loan default is.
If you default on a student loan you could be slapped with interest and penalties that nearly double your debt load. Your wages may be garnished. And not only that, a student loan default on your record can mean that in the future you can’t rent an apartment, get approved for a home mortgage, or even get a decent job.
This US News article provides specific details on the consequences of student loan default that every student borrower needs to know.
<BONUS #8.> Enter your student loan payment due dates in your personal calendar.
Be very sure you’re meeting at least your minimum student loan payment obligations every single month.
Remember, you’re keeping a very dangerous wolf from your door.
What about you?
What are your thoughts on what students should do about their student loan debt? Do you have a difficult story of your own to tell? Comment below or LIKE Jeannie Burlowski, Author on Facebook, find this post on that page, and let’s talk about it there.
Help keep your younger siblings out of student loan debt—suggest that your parents get their copy of my book:
It’s a reference book, so nobody reads the whole thing cover to cover. Your parents can pick out what they need to read in it using the fast-paced, 10-minute video instructions here.
Anyone can see more than 160 reviews of it on Amazon at:
You can see why financial advising professionals love LAUNCH, here.
You can see the top 9 questions parents are asking me about LAUNCH, here.
If your parents read just one chapter of LAUNCH every 1–3 months while your siblings are in middle school and high school, they’’ll know every viable strategy for debt-free college at exactly the right time to implement it.
And if your siblings are already well past middle school? That’s OK; your parents can run to catch up. But the process of getting kids through college debt-free goes more smoothly the earlier parents start it—especially if they’re not able to save up any money to pay for college.
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Who is Jeannie Burlowski?
Jeannie is a full-time academic strategist, podcast host, and sought-after speaker for students ages 12–26, their parents, and the professionals who serve them. Her writing, speaking, and podcasting help parents set their kids up to graduate college debt-free, ready to move directly into careers they excel at and love. Her work has been featured in publications such as The Huffington Post, USA Today, Parents Magazine, and US News and World Report, and on CBS News.