Student loans can help you fund the education required for your desired career. But there’s a lot of conflicting advice out there about the best way to manage your student loans. Whether you're still considering taking on this financial commitment or are building a post-graduation budget, don’t move forward without reading our best advice about student loans.
That said, let's dive into our best student loan advice, plus student resources to access!
The best advice about student loans: 10 Key tips
On the surface, student loans can feel overwhelming. And with such a big financial commitment, that’s not too surprising. Luckily, some good practices help you manage your student loans efficiently. So here’s the best advice about student loans that you need to hear.
1. Know the ins and outs of your loan
Before you can manage your loan efficiently, you need to know everything there is to know about your specific loan. Not all student loans are the same. And it is important to know the ins and outs of your loan.
Here are some things to keep in mind about your student loans:
How much will you borrow
Estimate how much you will need to borrow to complete your degree. A good way to estimate your costs is to take a look at the cost of attendance figures published by your school.
Don't forget to consider the costs of living outside of tuition like rent and groceries. Considering all of your expenses is the best student loan advice to apply!
What is the interest rate attached to your loan? Is the rate fixed or variable? A variable interest rate might seem lower upfront.
But there is a good chance that the interest rate will rise over time. Consider how a rising interest rate would impact your budget.
Are there any costs to taking out the loan upfront? Many private student loans come with loan origination fees. That means a cost that you'll need to cover before you can get the loan.
Some loan providers will allow you to take the origination fee out of your loan principal. But it's important to factor in that cost.
When is your first payment due? If there is a grace period, find out when the interest will start to accrue. You don't want to miss your first payment. That could lead to significant issues for your credit score.
The most important piece of advice about student loans is to make sure you understand all of the details about your loan terms. For instance, how long will the loan run? A longer loan can mean smaller payments. But you’ll be in debt longer.
So if you aren’t sure about any of the details above, check your loan paperwork. It should be in there. Most of the big things, like your interest rate and term, will be easy to find. However, details about fees and due dates could be buried in the fine print.
2. Find out who your loan servicer is
Basically, a loan servicer collects your loan payments on behalf of the lender. If you’ve taken out federal student loans, a loan servicer will be involved.
With federal student loans, you can determine who your loan servicer is through your Federal Student Aid account. But if you have private student loans, you’ll need to call the lender to find out if there is a loan servicer involved.
Once you’ve found your loan servicer, make sure to stay in contact with them. They should let you know when and where to make your payments.
3. Limit the burden after graduation
So it’s no secret that student loans can have a major impact on your finances after graduation. My top advice about student loans is to limit the burden after graduation.
There are a few ways to limit the financial impact of student loans after you get your degree.
First, try to take out as little as possible. You can do this by choosing a more affordable college, seeking out scholarships and grants, finding a work-study program, picking up a part-time job, or saving up as a teenager.
Even if you use all of the strategies above, you may still need to take out some student loans. If you do, consider paying the interest while you are in school. Although not every student loan lets interest accumulate while in school, it can add up quickly if your loan does.
4. Consider different repayment options
Student loan repayment options are not one-size-fits-all. Instead, there are many repayment options beyond the standard 10-year term for federal loans. As a federal student loan borrower, you have access to income-driven payment plans and extended repayment plans.
An income-driven repayment plan sets your student loan monthly payment to a level that your income can realistically support. And an extended repayment plan offers an option to lower your monthly payments by stretching out the term.
In either case, taking advantage of these plans can lower your monthly student loan payment. But it will stretch out your repayment timeline.
So if you can’t fit your student loan payment in your budget, look into alternative payment plans.
5. Don’t miss a payment
Life gets busy, and unfortunately, it can be easy to miss a payment. It might seem obvious, but a key piece of advice about student loans is to never miss a payment.
The best way to avoid an accidentally missed payment is to take advantage of autopay. In fact, automating as much of your finances as possible is a smart move. Check out our post on how you can automate your finances!
6. Avoid lifestyle creep
After you graduate, it’s tempting to upgrade your lifestyle. But sticking with a college lifestyle, for now, can help you pay off your student loans faster.
A few ways to keep your costs low include sticking with a smaller apartment and being aware of your spending choices. Of course, you shouldn’t skip treating yourself every now and then.
But when student loans are dragging your finances down, skipping lifestyle inflation is important.
7. Consider forgiveness options
If you have federal student loans, seeking out a forgiveness option is important advice about student loans. You may qualify for a forgiveness option. One of the most popular forgiveness options is the Public Service Loan Forgiveness program.
If you work for a U.S. government or non-profit, you may qualify for student loan forgiveness.
However, keep in mind that forgiveness won’t happen right away. Instead, you’ll need to make at least 120 qualifying payments while maintaining your employment status in a government or nonprofit role.
8. Make debt payoff a priority
Student loans can be a major drain on your finances. With that, a top piece of advice about student loans is to make paying them off should be a top priority. If you are tired of having student loans hanging over your head, then build a budget that prioritizes repayment.
Two ways to accelerate your repayment timeline include slashing other expenses and picking up a side hustle to increase your income. In either case, you can funnel more money directly toward your student loan repayment plan.
9. Think about refinancing
If your student loans have a high-interest rate attached, refinancing your student loans can be helpful. With a refinance, you may be able to tap into lower interest rates. A lower interest rate could lead to thousands of dollars saved over the life of your loan.
But if you have federal student loans, pause before taking this piece of advice about student loans. Although you could unlock a lower interest rate, refinancing your federal loans into a private loan would eliminate some of the privileges that come with your federal loans.
For example, federal student loan borrowers were given a reprieve on their student loan payments from 2020 through May 2022. But private student loan borrowers had to keep up with their payments.
Additionally, a refinance would make federal student loan borrowers ineligible for loan forgiveness programs.
10. Talk to your loan servicer
If you are struggling to make payments, reach out to your loan servicers. In some cases, the servicers may be willing to find a solution.
For example, the lender may be able to offer a forbearance period. With that, you wouldn’t be required to make payments temporarily. It never hurts to ask for help!
Best resources for advice about student loans
Student loans are a unique challenge for every budget. If you have student loans, the good news is that you can find extensive resources to help you manage this burden. So here's where to look for the top student loan advice:
- Clever Girl Finance: "Master your student loans" bundle (Completely free)
- Student Loan Hero
- Student Loan Planner
Each of these resources can help you learn more about your student loans. Plus, help you come up with an effective management strategy. You can also check out our article on advice to students for money, career, and life for more tips and resources!
Use our advice about student loans to become financially successful!
The student loan advice out there is very mixed. But the tips I’ve shared above offer some best management practices for this major financial commitment.
Remember to know all the details of your loan, keep your expenses low, and stay on a budget. You can become financially successful if you use this student loan advice!