April means 2 things for me:
1. Spring is finally here. (Yay!)
2. I only have about 3 months of my student loan grace period remaining. (Boo!)
Being a real person has taught me quite a bit about budgeting and saving. While I’m still new to the world of big-boy finances, a key nugget that I’ve taken away already is that having a financial plan is important.
Knowing how much per month I’m going to have to dedicate towards student loans will ultimately allow me to figure out how much will be left over for groceries, rent, and fun. With things like an expired apartment lease looming in my future, I knew it was important to have my numbers hashed out this month.
Below, I’ve listed out the process I went through to gather information about my loans—and to synthesize a plan of action to pay them back. If you’re graduating next month (or graduated recently) this is advice you won’t want to miss.
Know Your Servicer
From what I understand, your servicer is the company that holds your student loan. The big services that I know of are Great Lakes and Sallie Mae, but there are others, as well. It’s important to know who your servicer is early on in the process, as they will be the entity you actually make payments to.
How do you know who your servicer is? If you’re a recent graduate or soon-to-be graduate, my advice is check your email. Great Lakes started sending me emails well before I graduated in the winter, so I knew they were my servicer without having to dig around for too much information.
If you haven’t been contacted by your servicer (or if you’re in denial about repaying your loans and you’ve been deleting their emails), you can find out who holds your federal loans by checking the National Student Loan Database System (NSLDS®). This is the U.S. Department of Education’s central database for federal student aid records.
Know Your Debt
Once you’ve figured out who you’re paying, you need to figure out how much you’re going to owe them every month.
A word of advice: Do not try and calculate or estimate this amount on your own. The math isn’t as simple as taking your total amount borrowed and dividing it by 120 (12 payments for 10 years.) Interest rates complicate the equation considerably—and it doesn’t help that rates can be different for every loan!
Luckily, there are lots of online tools to help you figure out what your monthly payments will look like. My personal favorite is the federal government’s Repayment Estimator. It’s got an excellent, easy-to-use interface, and it imports your loan information with just a few clicks.
Keep in mind, though, this only works for your federal student loans. If you have private loans you’ll have to spend some time on the phone with your lender to figure things out. I’d recommend consolidating all of your information in your SALT account to keep everything organized in one place.
Know Your Budget
I’ve been experimenting with budgeting over the course of the last month. I truly think it’s something that every 20-something needs to do—and that’s doubly true for those with student loans!
My student loans are the one bill that I can’t really shrink (thank you private loans) or make disappear. I can, however, choose to buy fewer groceries, go out less, not have a smartphone, or pick up a side job. Therefore, I’m considering my monthly “income” to be whatever I actually make, minus my monthly loan payment. Whatever’s left over is what I can live off of. It’s an over-simplified version of what a budget can be, but it’s working for me so far.
Am I happy about that? Absolutely not. I could write 15 more posts on how deplorable and unfair I think the American student loan system is. But part of adulthood is dealing with reality, however bleak that reality may be.
I’m expecting things will start looking up once I’ve been out of school for a few years. Hopefully, as I advance my career further, the payments will gradually get easier to make.
Have you planning for your student loan repayment? Share your tips in the comments!