Does it surprise you that 86% of 4-year undergraduate students who apply for federal student aid will borrow money to go to school? With average student loan debt hovering over $23,000 for graduating seniors, it’s easy to see how so many people can be affected by the burden of student loan debt. If you were a May graduate, your six-month grace period is ending and those student loan payments are going to kick in within the next month or so. Now’s the time to take control of those debts and these tips will get you on the right track to paying down those debts faster than you can imagine. 1. Get Organized For those students who are in school right now, do yourself a favor and stay organized. Create a separate folder for each lender you use and file each notice you get from them. If you’re out of school, you should be getting summaries in the mail about your payments and current balance. Be sure to organize those and keep the online account login username and password in a place you can access if you forget what they are. We use a financial snapshot to organize our account information, and it’s saved us the headache of resetting our password when we forget what it is. Bonus Tip For Getting Organized If you’re in school, open a separate checking account for your student loans and only use this account for school expenses (not eating out or other things you should pay for with money you earn.) I was foolish my freshman year and saw a surplus of $500 in my loans account. Instead of using it the next year for school expenses, I withdrew it to ‘live on’ during the summer. I didn’t really need it, and encourage you to keep those accounts separate and designated only for school expenses. 2. Build a Loan Payment Account My wife and I opened a savings account at our bank and told our loan provider to draw each month’s payment from this account. Before the payment is drawn each month, we automatically move money from our checking account into the savings account. This helps us to keep the loan payments separate from other bills and automates it for us. One thing that has helped us tremendously is to keep a buffer in the savings account . If an emergency comes up and we can’t move money from our checking account fast enough, the buffer in the savings account will take care of the student loan payment. We try to keep an extra $500 in the savings as a buffer, but you may need less depending on your loan payments. Bonus Tip For Creating a Buffer If you automate a transfer from your checking account to your savings, round up the payment to the nearest round number plus $10. The loan payment that’s withdrawn from the savings account will remain the same, but you’ll build a buffer in your payments account that way. This way, you’ll be prepared in case you run into trouble one month and can’t seem to make a payment. 3. Budget for the Payments Log into your lender’s website and look for the ‘calculate my payment’ link. They should provide you with an estimate of what your payments will be. (I’d encourage you to do this while you’re in school too!) With your payments in mind, you should be able to anticipate how your budget will be affected. Use the six-month grace period to your advantage and try to tweak your budget to include the loan payments. Set aside that monthly payment during the grace period and use that to build an emergency fund before you have to really start making payments. Bonus tip for Budgeting the Payments If you don’t think you’ll be able to afford the payments, you can apply for Income Based Repayment through your lender. Income Based Repayments (IBR) lengthens the repayment of your loans and lowers your payments according to your adjusted gross income and loan amount. 4. Snowball the Loans Dave Ramsey popularized the debt snowball, and it works great for paying down those pesky student loans. You’ll probably notice that your loans are broken into a few different types (Stafford, unsubsidized, Perkins, etc), have different rates, and have different lenders. If so, you can use this to your advantage and eliminate the small school loans with extra money you make. Paying down a small loan completely will free up that payment, allowing you to snowball the next biggest loan. Bonus Tip for Snowballing Debt If you’re looking for a way to track your loans and see how the debt snowball will work for you, download this free debt snowball spreadsheet provided by J.D. Roth at GetRichSlowly.org. These tips have worked for us and I hope they work for you too! How have you managed student loans? Meet you in the comments! Image by Dmitry Kalinovsky / Shutterstock Related Articles: Which Debt Should I Pay Off First: Car or Student Loan? College Debt & The Student Loan Trap What You Need to Know Before You Get a Student Loan How To Avoid Taking Out Student Loans Early Auto Loan Payoff Calculator Paying off loans or retirement savings How To Apply A Lump Sum Payment To Your Debt Tim is a personal finance writer at Faith and Finance a Christian financial help blog that provides financial insights for individuals, businesses, and churches. Outside of finance, Tim enjoys spending time with his wife, playing the saxophone, reading economics books, and a good game of RISK or Catan. Find him on Twitter and Facebook . The articles on this site are for entertainment purposes and should not be taken as financial advice. Please contact a financial professional for specific advice regarding your situation. Also, many of the CPF articles help us pay the bills by using affiliate relationships with Amazon, Google, eBay and others. Find out more here .
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Student Loans: 4 Tips to Help You Manage Your Payments!