With 60% of college students borrowing today to fund their educations and the average student loan debt per person at $29,400, it is critical to understand the best process for managing the debt if you have it. Here are some of our thoughts as you manage through your student loans post graduation.
Student Loans are the Past - Focus on the future
According to a recent AICPA survey, 60% of recent graduates have some regrets as far as their student loan debts are concerned. The important thing to remember, though, is that your student loan debt is in the past. It is done, and you can't take it back, and the best way to manage it going forward is to accept it and focus on your future. If you become paralyzed by the decisions of your past, you will not have the positive mentality you need to move forward and tackle your student loan debt. Now you need to manage your student loan debts within the context of what you want for your future so that you will not create unintentional financial stresses while paying off your loans.
Make a Plan
Student loans can be complex and cumbersome, so having a good plan in place for how you will manage and repay the loans will be critical. Before you can even begin to plan, though, you need to understand what particular loans you own. Check out this post from us on the types of student loans you could have in your portfolio. After you categorize the loans in your portfolio, you will need to determine a repayment plan for you, while understanding that this repayment plan may change with time. We broke down a number of those repayment plan options as well as useful tools. Finally, you will need to decide on how much you can pay every year. Most graduates want to tackle their student loan debt as fast as possible, but that might not be the best plan. You should check out some of our thoughts on repayment amounts.
Schedule an annual review
You should plan to sit down and review your student loans at least once a year. A great time to do this is at the end of the year when you are planning your budget and goals for the following year. During this review, you should update the spreadsheet you created to determine if any of your interest rates changed and update your loan amounts outstanding.
While you are reviewing your loans, review your credit report to make sure that all of your loans are included on it and there isn't anything missing from your spreadsheet or the credit report. There are many sites that you can use to check your credit score, we like, Credit Karma and MyFICO. During your annual review you should also review your repayment plan options and make sure that you still have the best one for you.
The process of paying down student loan debt is a sometimes long and arduous one; however, if you create a plan like this and stick to it, then you will manage your debt better and reach all of your financial life goals along the way.