If you have anxiety about paying for student loans after graduation, follow this list. It applies specifically to federal student loans, which comprise more than 90 percent of student loans — but also can be used by private loan borrowers. Studentaid.ed.gov is a resource regarding student loans which can answer any other questions.
1. Get organized.
Sit down, make a drink and record your loans and their totals. Include all information — type of loan, minimum payment, interest rate and anything else you find. Go to nslds.ed.gov to look up your loans.
2. Research loan deferments.
A loan deferment is a period during which you are not required to make payments on your loan. You can receive a deferment for several situations, including attending graduate school and inability to find employment. Pay off loans as soon as you have the money to do so. But in case you can’t afford to, knowing your options is crucial.
3. Consider loan consolidation.
Loan consolidating turns multiple student loans into a single loan, making it easier to keep track of payments. Many pros and cons exist for consolidating loans, so research all options available before you consolidate.
4. Make a budget.
See how much you can afford in monthly payments by making a budget. Everyone’s budget will be different based on income and lifestyle expenses. Consumer.gov has a great budget-making guide. You should make several budgets by changing your expenses as multiple budgets will help in future steps. See how much money you can save by eating out less or getting a roommate.
5. Calculate loan repayments.
This is easier than it sounds, I promise. Go online and find a student loan calculator you like. The calculator takes your loan and interest rate and tells you how long repaying your loan will take given your monthly payments. Most calculators also tell you how much interest you’ll pay over the lifetime of your loan. Remember, the more you pay now, the less interest you pay. Use the calculator for every loan and every monthly payment you calculate in your budgets. Write down how long repayment will take and the total amount of interest you will pay.
6. Choose your repayment.
Double-check the payment plans available for your loans and choose the one right for you. Carefully consider your plan based on the version of your budget you are most comfortable with. Take into consideration if you’d rather pay now to save on interest costs or vice versa.
7. Research loan forgiveness.
Many professions — including EMTs, military personnel and social workers — have loan forgiveness programs. The plans mean you do not have to pay back your loan, but you might have strict requirements, such as working in that profession for 10 years. Research if you qualify for one of these programs and consider if it’s right for you.
8. Sign up for automatic payments.
Now that you know how much your monthly payments will be and you have made a budget, you should set up automatic payments. This way, you can’t miss a payment this way, making sticking to your budget easier. Some loans even offer an interest rate discount for automatic payments. Contact your loan provider and ask about direct debt to learn more.
9. Receive tax deductions.
If you pay interest on student loans, you may be eligible for tax deductions up to $2,500. To receive the deduction, you cannot be filing under “married filing separately,” your parents cannot claim you as a dependent and your modified adjusted gross income must be less than $60,000. Fill out the 1098-E form to receive this deduction.
10. Update budget and payments.
Since you will just be starting out your post-college life, your income and expenses will change frequently. Be sure to revisit your budget annually at the minimum and, preferably, twice a year. Change your monthly payments accordingly.
Jay is a 21-year-old finance senior from St. Simons Island, Georgia. You can reach him on Twitter @hjcranford.