How to pay off your student loans after graduating - CCCU
Tuesday, October 1 CCCU
How to start paying off student loans after graduation
Looking for information on how you can start paying off your student loans after graduation? Here are the inside tips on when you need to make your first student loan payment, saving for retirement vs. paying off your student loans, and what you can do to set yourself up for lifelong financial health after college.
You’re all done with college –– congratulations! Your hard work has paid off, and celebrations are definitely in order. What now? When is your first student loan payment due? How much should you pay toward your student loans each month? What’s the best way to set yourself up for long-term financial security
? We know these are difficult questions to answer.
If you’re fresh out of college and navigating a post-grad life in Portland, we’ve got you covered. Keep reading to learn how to start paying off student loans after graduation.
When will I need to make my first student loan payment?
Whether you’re feeling ready to take on the world or are overwhelmed by catching up with your bills, every new grad or student deserves to have the right information on how to manage their finances. We know student debt is difficult. But don’t worry –– you’re not alone. Almost 70 percent
of college graduates carry student loan debt. With that said, you might be wondering, When will I need to make my first student loan payment?
In most cases, the first payment on your student loans will be due six months after you graduate
from college. This grace period will give you a little time to start a new job, get your finances in order, and maybe even save a little money. However, six months will be over before you know it, so it’s essential to be prepared for your first payment. This means knowing how much you owe and how much your monthly payments will be so you can budget accordingly.
Additionally, your loans will accrue interest during the six-month grace period, depending on your loan type. If you think you’re unable to make your first student loan payment
, options like the income-based repayment plan, Pay As You Earn (PAYE), and short- or long-term deferment might help you. Most lenders will also work with you to find a repayment solution, so don’t be afraid to reach out with questions.
How much should I pay each month on retirement vs. student loans?
might be the last thing on your mind after graduating college. While retirement may seem like a lifetime away, putting money toward a 401(k) or IRA account early on is one of the best things you can do for your financial future. By saving a little money each month for retirement now instead of starting five, 10, or even 15 years from now, you’ll have a solid financial foundation that you won’t regret building.
So, how much should you pay each month on retirement versus student loans? While it might be tempting to get this sudden mountain of student loan debt off your plate sooner than later, it’s important to make sure you’re putting at least a small percentage of your income toward retirement. By contributing to a 401(k) or IRA early on, you’ll see your money grow as you contribute to an account instead of having to make up for lost time (and lost money in the form of interest rate of return). Also, student loans typically have low interest rates
, so paying them off over time is not as damaging to your credit score as slowly paying off credit card debt or personal loans
What you can do to set yourself up for lifelong financial health after college
It’s never too early to start thinking about your future. So, what can you do to set yourself up for lifelong financial health
? In addition to on-time student loan payments and retirement contributions, one of the smartest things you can do after college is to create an emergency fund
What exactly is an emergency fund? Typically held in a savings account, it’s a “money buffer” you’re able to fall back on if you ever lose a job, face unexpected medical expenses, or have another financial crisis. Ideally, you’ll want to have enough money saved to live off of for six months. Some college grads take advantage of the student loan grace period to start an emergency fund.
If you’ve got your retirement account set up and are saving money on a regular basis, you might be feeling ambitious about paying off your student loans as early as possible. One obvious strategy is to make monthly payments that are larger than the minimum due. Another option is to make bi-weekly payments, which will decrease the total amount of interest you pay when all is said and done. It may also be a good idea to set your student loan payments, retirement contribution, and savings transfers to deduct automatically from your checking account. This will help prevent missed payments and help you avoid the temptation of skipping out on saving money each month.
No matter the route you choose for paying off student loans, budgeting is key
, and it’s easier than you might think! There are tons of user-friendly budgeting apps that will help you manage your money, pay your bills, and spend your finances wisely.
When it comes to post-grad financial support for Portlanders, Consolidated Community Credit Union has everything you need. From easy-access checking and savings accounts
to retirement, online banking, and bill pay, consider us your one-stop resource for your personal finances. Become a member
at CCCU, and confidently enter the world of adulthood.