Personal Banking WHITE PAPER SERIES Dealing with Student Loan Debt
You earned a degree. Now it s time to earn financial freedom. A college education may be the best investment you can make. In terms of annual salary, college graduates typically earn quite a bit more than non-graduates. Over the span of a lifetime, that difference can really add up. Problem is, many grads enter the working world with debt sometimes quite a bit of it. In this guide, we ll take a look at why you should pay off that debt ahead of schedule, and how to do it.
PART 1 You re out of college, but there s still plenty to learn. There it is, proudly displayed on your wall: that brand new diploma. We offer our heartfelt congratulations. If you earned it without borrowing any money, you can stop reading here (and have the butler bring you some caviar). But, if like so many others, you had to borrow money to attend college, please read on. Your degree will undoubtedly open doors for you. But to really take advantage of those opportunities, it helps to pay down your debt ASAP. As it decreases, your credit score will likely rise. That, in turn, will help you qualify for better rates when buying homes, cars, or other grown-up stuff. But let s not get ahead of ourselves. For now, let s focus on how to start paying down those student loans.
PART 2 Real world tips for living with (and paying down) student loans. We ve compiled a few of our favorite tips for paying down student loan debt. Nobody said it would be fun, but by following these suggestions, you could be debt-free years ahead of schedule. Return to the nest. If your parents haven t already converted your old bedroom into dad s new man cave, consider living with your folks for a year or two. Will it cramp your style? Probably. But remember, nothing cramps your style like crushing debt. So it s a pretty reasonable trade-off. Go easy on the major purchases. We get it. Since age 13, you ve been lusting after your very own sports car. But we highly recommend sticking with a clunker for now. If it will get you from A to B, it s good enough. Watch the little things, too. Consider more school. Yes, coffee is awesome. But don t treat yourself to a $5 latte every day. Same goes for eating out, music downloads, and other non-necessities. Lots of little purchases add up to one big chunk of money money that s best applied to your loans. This one may seem counterintuitive at first, but think about it. People with advanced degrees often earn significantly more than those with Associate s or Bachelor s degrees. Just be sure you re getting an advanced degree that s marketable. Consider a (gasp) second job. Hit the high interest rates first. If your schedule allows it, pick up a second gig. Even if you only work 20 hours a month at $8 an hour, that s 160 bucks a month you can dedicate to loan pay down. Do you have multiple loans? If so, focus on the one with the highest interest rate first. By doing so, you ll help your money work even harder for you.
PART 3 Never graduate from being frugal. Here s the thing: many of the tips we ve discussed here are good ideas even if you aren t swimming in student loan debt. So remember, a couple of years from now when you re completely debt-free, don t go on a spending spree. The point is to develop wise financial habits.
Life needs a great bank. For more advice on paying down debt or any financial subject feel free to talk to a local MainSource banker. They re financially savvy & always willing to help. MainSource Bank is not an Attorney, Accountant, or Tax Advisor. This document is provided to assist you in starting a conversation with a professional in these matters, such as an Attorney, Accountant, or Tax Advisor. MainSource Bank does not guarantee or warrant the accuracy of the information of this document.