Managing Your Student Loans After Graduation

Graduating from college can be one of the most liberating experiences in your early years of life. Aside from being able to display that shiny, newly framed degree, you can finally venture out to find a career and begin adulthood.

Ready to jump into a brand new car and purchase your own home? Not so fast. Although you now have earned your degree and will presumably be making a decent annual salary, student debt may still be looming around the corner… and if that’s the case, say goodbye to all of those new fancy purchases— Unless you want to dig yourself into a hole of debt.

Instead of focusing on all of the possible new and large purchases you may be able to afford now, your first priority should be to pay off your student loans. Sure, this may not be something you want to hear, but it’s something you definitely need to think about. The longer you wait to pay back student loan debt, the more interest and fees you will accrue in the process.

Need a real life example?

According to annual reports from The Institute for College Access & Success, the average student loan debt is $29,400. On top of that, interest rates can range anywhere from 4.29% to 6.84%. With a standard 10-year repayment plan and an interest rate of 5%, you’re looking at paying $8,020 just in interest alone!

As a recent graduate with such a large amount of debt, you are going to need an impressive credit score or a qualified co-signer to help you fulfill a large purchase. Here are a few tips to help you manage your student loan debt.

Top student loan tips for recent graduates

1. Know your numbers… or in this case, loans.

If you’ve heard Robert Palmer talk about his Saving Thousands Rules, you’re well aware that Rule #1 states that you should always know your numbers. In this case, we want you to become familiar with your student loans. It is extremely important to keep track of your balance, repayment period, repayment plan and your lender. Be sure to create a paper trail by making copies of recent bills and bill payments.

2. Know your grace period

After your graduation, you are granted a “grace period” which essentially translates into how long you can hold off on making student loan payments after you graduate. Each type of loan has a different grace period, so speak with your loan provider about what guidelines apply to you.

3. Know your lender

A lot of recent graduates start making payments without doing any research on who their lender is. Before getting out your checkbook to make that monthly payment, make sure you know who you are paying. Additionally, if any informational changes take place during the life of your loan— like moving or changing your telephone number— keep your lender in the loop.

4. Pick a repayment plan that works for you

The standard federal student loan repayment plan is 10 years. However, there are numerous repayment plans to choose from that will work just for you. Student loan borrowers can choose from income-driven repayment plans such as Income-Based Repayment or Pay As You Earn. Both plans offer monthly payments at a reasonable percentage of your income. To find out more about Income-Based Repayment and related programs, visit

5. If possible, pay more each month

If you can afford to pay more than your required monthly payment, you can potentially lower the amount of interest you pay throughout the life of the loan. If you want to pay off your loan quicker, include a written request to your lender specifying that the extra amount be applied only to your loan balance.

6. Pay off the most expensive loan first

If you would like to pay off one or more of your loans ahead of time, start with the loan that has the highest interest rate. If you are between a private loan and a federal loan, start with the private loan first— they probably have the higher interest rate anyway.

7. Consolidate

A consolidation loan merges multiple loans into one for a single monthly payment and one fixed interest rate. There are pros and cons of doing this, so we suggest taking some extra time to research this option. The Institute for College Access & Success urges borrowers to never consolidate federal loans into a private student loan, or you’ll lose all the repayment options and borrower benefits – like unemployment deferments and loan forgiveness programs.

8. Loan forgiveness

If you’re looking to have your loans forgiven, there are various programs available for you. Public Service Loan Forgiveness is a federal program that forgives any student debt remaining after 10 years of qualifying payments for people in government, nonprofit, and other public service jobs. Additionally, there are other federal loan forgiveness options available for teachers, nurses, AmeriCorps, and PeaceCorps.