After graduation, the reality of paying back student loans may seem unnerving. Students who complete their college education may not begin their careers right away, leading to uncertainty about one’s financial future. Take a look at these six tactics new or upcoming graduates can use to manage their debt.
1. Consolidate loans
As students rely on a variety of loans from different sources, interest rates can vary dramatically. Instead of managing several payment schedules and interest rates, graduates can opt to consolidate their student loans. This allows borrower to bundle all of their loans in one spot, focus on one interest fee (which may be lower), and manage a single payment.
2. Avoid income downtime
While some graduates may have their dream careers lined up right after leaving school, some people drift across jobs and industries until they find one they like. As the market is flooded with a new, young workforce, it may prove difficult to find one’s desired career immediately after graduation. Avoid major gaps in employment, as intermittent income can lead to late loan payments and fees.
3. Trade stock
Getting involved with stock trading can be a highly effective way to pay off student loans, especially when graduates invest in diverse and successful stocks. Graduates often learn about stocks through their new workplaces, online, or by reading financial news. Being aware of upcoming markets, new tech releases, and industry news can help new stock traders build a robust portfolio. Dividends earned by purchased stock can be used to make loan payments.
4. Set up a business
Many new graduates are exploring startups and creating small businesses to address niche market needs. Entrepreneurship has become a viable source of income, as digital storefronts and communications can dramatically reduce overhead fees. Graduates that launch successful startups may decide to sell their companies in the future and generate even more income to pay off debt and take care of living costs.
5. Pay on time
Lenders typically have strict billing timeframes with hefty late fees. Make sure to factor loan payments into one’s personal budget and pay debt off on a timely basis. Late fees can snowball and create a bad financial situation, affect credit, and add time to one’s payment schedule.
6. Defer loans
Graduates who are seeking further college education or exploring other career options, such as the Peace Corp, military, or other route may be eligible to defer their student loans. Federal and state government programs may offer deferment programs, especially if a graduate plans to offer overseas aid or join the armed forces.
