Graduating college is beyond exciting; new job possibilities, relocation opportunities, and fulltime adulting. With that comes the responsibility of making student loan payments and adding this new item line into your budget. This can seem scary and overwhelming, but we have some tips to help make student loan debt more manageable!
The average student loan payment is around $390 per month. Rounding can mean round up to the nearest dollar, ten dollar, or more! Any amount processed higher than your minimum payment, even 50 cents, will add up and save you money by limiting the amount of interest you pay over the life of the loan.
Did you just get a new job or raise due to your new degree? This is the perfect time to pay down debt faster without impacting your day-to-day life. If you were already able to budget with your previous income, take the extra amount you get with each paycheck and apply it right to your debt! Not only will you lessen the time you have to pay on the loan and lower the interest assessed, you can also stay consistent with your current budget.
Interest rates matter… a lot. For example, if you owe $30,000 with an interest rate of 5.5% APR (Annual Percentage Rate), your monthly payment would be approximately $245 for a 15 year term. Alternately, if your interest rate was lowered by even 2% to 3.5% APR, your payment would decrease to around $214. This saves over $30 a month and $360 per year. Even better, refinance for a lower rate and keep making the higher payments to pay off your loans early!