A Graduate’s Guide to Managing Debt After College

Transitioning from the hallowed halls of academia to the real world is a monumental feat—congratulations! But once you’ve tossed your cap and framed your diploma, the burden of student debt can cast a shadow on the excitement of this personal milestone.

If you’re a recent grad staring down a mountain of loans—including student loans—know there are strategies to manage your debt and pave a path to financial stability.

Dealing With Student Loans

It’s not unusual to feel overwhelmed when your first student loan statement arrives. For some, student loans can seem like an impossible burden that will follow you forever. But there’s good news—they don’t have to be as intimidating as they seem, especially if you have federal student debt. Here’s how to start tackling your student loans:

• Consider consolidation. Using a Direct Consolidation Loan can simplify your federal student loan payments, potentially lower your interest rate, and help you qualify for new forgiveness programs, saving you money in the long run.
• Apply for income-driven repayment. Work with the Department of Education to see if you qualify for an income-driven repayment plan that reduces your monthly payment to as little as $0 a month.
  
  
• Research student loan forgiveness programs. Federal student loan forgiveness is available for people in public service roles, first responders, and several other groups. Check to see if you’re eligible to have part or even all of your student loans forgiven.

You can also reach out to a certified credit counselor to get student loan counseling for both federal and private loans and for help exploring all of your debt management options.

Setting—and Sticking to—a Budget

The word “budget” often conjures images of strict financial plans and discontent. In reality, a budget is simply a list that compares your income to your expenses, but you can also use it as a tool that empowers you to take control of your finances.

• Start by calculating your monthly net income (after taxes). Include any post-graduation income sources like your full-time job, freelance work, or even part-time gigs.

• Next, list your fixed expenses. These are costs that remain the same each month, such as rent, utilities, insurance, and minimum debt payments.

• Then, allocate a portion of your income to savings and additional debt payments. Consider using the debt avalanche or snowball methods of repayment to increase your financial momentum.

• Finally, sort out your variable expenses like groceries, entertainment, travel, gifts, and personal care items. Be honest and realistic about what you spend in these categories. Reviewing your financial statements can help you get a clearer picture.

Boosting Your Credit Scores

Your credit scores are like your financial “GPA.” They influence your ability to rent an apartment, buy a car, qualify for a mortgage with affordable rates and even qualify for certain jobs. Here’s how to make sure your scores shine:

• Keep an eye on your credit reports. You’re entitled to a free copy of your reports from each of the three major credit bureaus once a week. Pull your free reports at AnnualCreditReport.com and dispute any inaccuracies that could be dragging your scores down.

• Make timely payments. Your payment history is one of the most significant factors in your credit scores. Aim to make on-time payments on your debts every month to maintain and improve your scores.

• Use credit wisely. Keep your credit card utilization low, ideally paying your cards off in full each month, and be mindful of opening new credit accounts, which can temporarily ding your scores. Once you open a credit card, aim to keep it open indefinitely since closing credit cards can also hurt your scores.

Reaching Out for Support—The NFCC Helps Recent Graduates

Personal finance shouldn’t be a solitary endeavor—you’re not alone. The National Foundation for Credit Counseling (NFCC) partners with a network of respected non-profit agencies that provide financial counseling and education.

Whether you need to discuss debt management strategies, student loan repayment, or other financial concerns, our partner credit counselors can arm you with the tools you need to pay off debt efficiently and plan for a bright financial future.

Graduates—face your financial situation with a proactive mindset! Remember, it’s okay to ask for help. NFCC is here to support you on your financial wellness path—schedule an appointment online or call us today at (800) 388-2227 to get started.