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If you recently graduated from college, congrats! You've just joined the ranks of the highly educated. You may have also joined a group of more than 43 million Americans who have student loan debt.
After graduation, you have some time before your first loan payment is due. Graduates typically get a six-month grace period, after which your student loan payments will be due at a set time every month. (Private lenders may have different grace period policies, so check with your lender to find out when you start repayment.)
Paying back student loans might not be pleasant, but if you have a plan, you may be able to tackle your debt sooner than you think. For help getting started, here are five tips for paying back your student loan debt as a new graduate:
1. Start Paying as Soon as You Can
If you have the financial means, start paying back your loans as soon as possible. Some loans continue to charge interest during your grace period. Depending on your loan, you could be racking up interest for each month you don't pay anything.
2. Pay More Toward Larger, High Interest Loans First
Take a look at your loans and see which ones are the largest and which have the highest interest rates. If you can pay extra each month, make sure the excess money is going toward the loans with the highest interest or balance to help save money over time.
3. Pay More Than the Minimum Each Month
Do whatever you can to pay more than the minimum each month. The more you can pay each month, the fewer payments you will have to make over the life of the loan. Keep in mind that you'll need to let your loan servicer know you want the extra amount applied to the current month's payment—otherwise they may apply it to the following month's payment.
4. Consolidate Your Loans
Consider consolidating your loans into one loan with a lower interest rate. Doing this can help you take years off your repayment period and can save you thousands of dollars in interest.
5. Get a Side Hustle
If you've already started down your career path with a new job, considering also getting a side hustle and using the extra money you make each month to pay down your student loan debt. This could help shave several years off your repayment period.
While paying back your student loans, make sure you make all your payments in full and on time. Payment history is one of the largest factors used in calculating your credit scores, and even one late or missed payment can have a negative impact on your credit—which will be important if you need an auto loan or other credit product soon.