How to Lower Your Debt After College

How to Lower Your Debt After College

BIG Ideas:

  • According to the Education Data Initiative, the total average student loan debt may be as high as $40,681.
  • Setting a monthly budget and tracking your spending and expenses can ensure you have money set aside to pay your student loans and other bills.
  • If you’re having difficulty making payments, consider exploring repayment plan options or refinancing your loans.

You graduated college with a shiny new degree and the promise of a brighter future. But if you left school with student loan debt, your financial future can feel a little cloudy.

You’re not alone. According to a report by the Education Data Initiative, the average student borrows over $30,000 to pursue a bachelor’s degree.

The good news is you have the power to take charge of that debt. Here are some ways to help you:

  • Create and stick to a budget. Budgeting is an essential skill that can ensure you meet your bills and reach your goals throughout your life. Start by determining and tracking your monthly bills and income to see how much money you have left over and how you are spending your money each month. For extra budgeting help, check out these apps that make budgeting easy.
  • Live within your means. After creating your budget, you’ll determine the amount of spending money you have every month. If you don’t have enough money left over after paying bills, look for ways to cut your expenses and never spend more money than you have.
  • Know what you owe. Inventory all your debt, including student loans, auto loans, and credit cards, and their interest rates.
  • Avoid credit cards and other high–interest debt. The last thing you need is more debt, including costly credit card debt. If you already have credit card debt, focus on paying off high-interest debt first!
  • Consolidate or refinance student loans. If you’re having difficulty making student loan payments, you could refinance your existing student loan. Refinancing can help you get a lower interest rate, a single payment, or extend the term of your loan to reduce your monthly payments. But be careful, if you refinance your federal student loans with a private lender, you will no longer be eligible for public loan forgiveness or other federal loan benefits.
  • Build an emergency fund. Unexpected circumstances can happen in life, such as car repairs, medical expenses, or job loss. An emergency fund can be a safety net to help you manage those expenses. Experts recommend you have at least three to six months of expenses in a liquid savings account.
  • Boost your income. Consider getting a part-time job or side hustle, or selling items you no longer need to get extra cash. If you have a full-time career, look into training opportunities to build your skills and hopefully increase your earning potential.
  • Set up automated payments. Paying your loans automatically will ensure you never miss a payment or have to pay costly late fees. Some lenders even offer interest rate discounts if you set up auto-pay, which can add up to some serious savings!
  • Negotiate interest rates and/or repayment plans. If you’re having difficulty making your student loan payments, contact your lender or loan servicer and explain your situation. With federal loans, you may be able to lower your payment by enrolling in an income drive repayment plan, or qualify for deferment or forbearance depending on your situation. Learn more about repayment plans and deferment or forbearance.
  • Seek loan forgiveness programs. In some circumstances, you can have your federal loans forgiven, cancelled or discharged. Loan forgiveness programs may be offered by an employer, lender or through government assistance programs. Be on the lookout for forgiveness opportunities available and watch out for loan forgiveness scams.
  • Seek financial counseling if needed. One of the most important steps you can take if you’re having difficulty with your loans is to seek help from your lender (usually by contacting your loan servicer). Ignoring your payments will only result in penalties, like late fees, and damage to your credit score, which can impact your ability to meet your goals in life, such as buying a home or car.

Brazos is here to help you reduce those high college payments

For more than 40 years, Brazos Higher Education has been helping make education more affordable for students and parents. As a non-profit, we can help you consolidate and refinance high-interest student loan debt and take charge of your loans and financial life. Contact us today!