Millennials and Student Debt

In the year 2013, a study showed that 7 out of 10 seniors, or about 69 percent of college students graduated with an average student loan debt of $28,400. This is not an insignificant amount of money. For students just out of college, paying off this massive loan may seem like a daunting and nearly impossible task, especially with an ever-changing and fluctuating economy. Here are a few tips for millennials on how to manage student loan debt:

1. **Know what you owe. **Know the exact amount of money (down to the penny) that you owe the student loan company or loan servicer. Know the difference between an unsubsidized loan and a subsidized loan, and also know the interest rate of each. The interest rate of each loan might be different depending on the type. If you have any questions at all about your loan, contact your loan servicer. You want to have a clear understanding of how everything works as you are paying them back.

2. **Pick repayment that is right for you. **Just because it’s the lowest payment option doesn’t necessarily mean that’s the right option for you. You can personalize your own repayment plan based on whether or not you have a job out of school. If you are employed, your debt repayment plan can be adjusted depending upon your salary.

3. **Pay above the minimum, if possible. **Any extra money you make here and there should go toward your loan payment. If you can pay more than the minimum payment, do it! The faster you pay off your loans, the less you’ll owe in the long run as they collect interest. Even if it’s just $20, any amount you can throw towards the debt, you should.

4. **Keep yourself accountable. **Defaulting on your student loans will make your credit score take a huge hit! Be sure to make ALL minimum monthly payments on time, every time. If you’ve just graduated, you probably haven’t established much of a credit score. Your student loans may be the foundation for that credit score, so you’ll want to stay on track! Set reminders in your phone a week before each payment is due.

At Richard Banks & Associates, we understand that paying back student loans can seem overwhelming and arduous. We’re here to help! Set the financial foundation for your next few years by staying organized and timely with your student loan payments. Have a safe and wonderful week!