How To Fit Student Loan Payments With Your Financial Goals

Don’t let student loan payments overwhelm your budget. Reach your financial goals with these tips.

Many college students find themselves responsible for making student loan payments within six months of graduating. Experian reported the average student loan debt was $38,787 in 2023 – representing a minimal decrease (-0.6%) from 2022. Even so, this can be a significant amount, especially for a recent graduate.

Keep reading to find out how to manage your finances and decide which of these expenses need to be prioritized in repayment.

Reach Your Financial Goals

Budget

Budgeting is the tried-and-true method to getting an overall picture of your finances and is critical to building an effective repayment strategy. When building your budget, it’s important to create a detailed list of income and expenses in order to identify priorities and cost-cutting opportunities.

Start With Your Student Loan Debt

If you have government loans, choose a repayment plan that works best with your income, budget, and goals. In addition, you can apply for forbearance or deferment if you’re unable to make payments and meet the qualifications.

It may also be a good idea to consider consolidating your student loans. This’ll make it easier to see your total balance and might even give you a lower interest rate or payment – plus, you’ll be able to factor one payment into your budget much easier than multiple payments.

In some cases, students qualify for loan forgiveness. Explore these options even if you think you’re not eligible. The less you have to pay, the faster you can reach your financial goals and enjoy greater financial freedom.

Organize Credit Cards By Their Balances

More than half of college students are also graduating with thousands of dollars in credit card debt, according to National Debt Relief. Create a plan for paying off your credit cards – start by listing them from the lowest to highest balance while notating their interest rates.

Next, chose a repayment strategy. The two most common and reliable ways to pay down debt are the snowball and debt avalanche methods. If seeing small consistent victories is what you need, then the snowball strategy is for you. However, if saving hundreds in interest is your goal then the debt avalanche method may suit you better. Both options, however, can help speed up repayment.

Prioritize Your Financial Goals

If you’ve just graduated college, you’re likely not thinking about saving for a car, a down payment for a house, or your retirement. Take a moment to write down both short-term and long-term goals to help motivate and guide you. Consider what it might take to accomplish those goals.

Feeling overwhelmed or a bit lost? Schedule a free consultation with a financial coach to figure out what your next steps can be.

Saving Is Still A Priority

It’s sometimes assumed that all money needs to go toward debt, but building an emergency savings is a definite necessity. Make sure to pay yourself first, as you would a bill, to set aside money for any unexpected expenses and avoid additional debt. It’s recommended to have three to six months’ worth of expenses saved but you can start small and work your way up gradually.

Helpful Tips:

• A bare-bones budget can be a helpful tool in cutting any unnecessary expenses and therefore freeing up more cash for debt repayment or financial goals.
• Don’t neglect one form of debt in order to pay another. Becoming delinquent in credit card debt in order to focus on student loan payments will not help you pay off debt faster – it’ll only set you further back. Utilize that budget you created and see where you can cut discretionary spending to expedite your debt repayment process.
• If your financial goal is to buy a car or save for a down payment on a house, use our calculators to see what the payment could look like with your current budget. If you can’t afford it now, you could take steps to prepare, such as reducing debt and increasing your income.

Summary

The key to student loan repayment is taking a holistic approach to your finances. By reviewing your budget, exploring student loan repayment options, preparing for unexpected expenses, and outlining your goals, you’ll be better positioned to live your A+ life!