Preparing for Life After College: Student Loan Repayment
In my three years working at MEFA, I have often heard the financial steps that parents take to help their children pay for college. These include slimming down on leisure activities, creating a budget, or taking on a loan. I've also talked to students who have borrowed a loan to pay for their education. For some, taking out a student loan is necessary to pursue post-high school education and achieve that dream of becoming a doctor, lawyer, engineer, etc. Of course, soon after that loan is borrowed, students need to start thinking about repayment.
Like many recent graduates, I will soon begin the inevitable requirement of borrowing student loans: repayment. While the process of repayment felt far away back when I was in college, repayment has now become very real. I didn't often think about repayment showing up, but it has.
However, I've realized that I can tackle the repayment process with determination, a plan, and a willingness to see the light at the end of the tunnel, in spite of the numbers on the loan bills. Although my repayment journey doesn't start until two months from now, here are five steps that I'm taking now and recommend to other recent grads to help get prepared.
1. Talk to Your Servicer
Before your grace period ends and your repayment begins, talk to your loan servicer about different repayment strategies, best practices, and what you can expect in the billing process. Remember that your loans servicer can be a resource to help you and answer any questions. Be sure to stay in contact with them!
2. Talk to Friends
Remind yourself that you are not alone on the repayment journey. Surround yourself with friends who may be in the same boat as you, or even friends who can provide strategies that helped them when they were dealing with repayment. Seek guidance and encouragement wherever you can. Talking about this big step with others can help ease the burden.
3. Create a Budget
Creating a budget can help you pay your student loan payment in full and on time each month. In addition, you will be able to see how much money you have leftover to pay for other expenses such as rent, utilities, car insurance, etc.
4. Set a Goal
After you determine your budget, think about creating a goal for your loans. Do you want to repay your loans quickly or pay as little as possible per month to leave room for other expenses? By having a goal in mind, you can keep yourself accountable and begin to see the road ahead.
5. Make a Plan
Formulate a plan that can (and will) encourage you to stay on track, accountable, and on time as you pay back your loans. For example, most loan servicers allow you to set up automatic payments so that you can ensure your loan payment is sent on time each month. It's important to have a method in place to pay your loans on time.
All in all, while the repayment process may feel daunting, imagine the sense of relief you'll feel at the end of it. You may encounter some bumps along the way, but if the going gets tough, remember to: talk to your loan servicer, talk to your friends, create a budget, set a repayment goal, and lastly, make a plan. If you can do those five steps, not only will you be an informed borrower, you will have the potential to experience a smooth repayment journey. As always, if you or someone you know is about to begin repayment and needs some extra guidance, please give one of our College Planning Experts a call at (800) 449-MEFA (6332).