For those recent college graduates of 2008, the student loan “grace period” has almost reached its end. For many, the first payment will be due in December or January – just around the corner! With the economy in a recession, graduates worry about finding a full-time job and also how they will be able to re-pay their loans without one.

It is not an easy time to just have graduated from college. However, we all have to find a way to move forward and re-paying our loans is all part of the plan. According to our partners at MainStreet.com, in 2004 the average student graduated with about $19,000 worth of student loan debt. This number continues to increase as more students look towards financial aid to support their college years.

Here are some tips that may help you when repaying your student loan debt:

Pay Off Your Interest First – Although I didn’t have much in my savings when I first graduated, I found it really helpful to pay off my interest first (before my “grace period” was even over). Interest will add up quickly over time, it is best to not have to pay even more interest on the interest you have accrued over the past few years at college.

Choose the Correct Repayment Plan for You – Often times there is more than one repayment plan that is offered with your student loans. Make sure that you choose the one that best fits your situation. There is typically an ‘income contingent’ plan which takes into account how much you are earning per year. This may be the best plan for you if you have not yet found a full-time job opportunity. The market is tough and many graduates are struggling to find the right jobs for them.

Take Advantage of Direct Payment – Direct Loans offer an Electronic Debit Account (EDA) which allows your bank to automatically deduct your monthly payment from your checking or savings account. Not only does this make payments so much easier and ensure that they are always on time, it also offers you a discount on your interest. Your interest rate will be reduced by a ¼ a point (.25%) just for enrolling in EDA. Although this may not seem like much, it will add up in the long run.

Consider Forbearance – According to an article on MainStreet.com, forbearance is where lenders may choose to let borrowers either extend their repayment period or put their payments on hold for a while. Read more about forbearance and who qualifies in the full MainStreet.com article here.

Bank Account – Another thing you could do is open a separate bank account that is only for your loans. Each month you could put money into this account and then link this to your EDA. This way you are making sure that you are not spending your loan money on something else…like clothes! It also ensures that you will be able to tell how much money you have saved towards your loans without it being combined with the rest of your savings. It makes life easier! Also, make sure to include your loan payments in your Geezeo budget and set goals so that you are covering all your bases.

Let’s face it…student loan debt isn’t just going to magically disappear (as much as we would love it to)! Make the decisions that work best for you and consider all your options. As hard as things might be, try not to fall behind on your payments. Eventually, you will repay all of your loans and it will be the greatest weight off of your shoulders and a great sense of financial accomplishment.

Photo: MeraM

Related Articles:
How To Get Your First Job Bonus To Go The Extra Yard
What the Fine Print On Your Student Loan Really Says
Student Loan Justice

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This entry was posted on Tuesday, October 21st, 2008 at 6:15 am and is filed under Budget. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.