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Dealing With Student Loans

Dealing With Student Loans

We hear it over and over that student loans are at all-time highs. Student loans prohibit Millennials from getting ahead financially and prevent many from buying a house, saving for retirement, or even having emergency funds for life’s unexpected expenses. With this said, let’s take a look at some statistics to understand how concerning the problem is.

As of December 31, 2019, the average federal student loan debt was $35,397, and the total student loan debt has reached $1.64 trillion. Not only that, but it is not uncommon to have student loans upwards of $100,000 from prestigious universities or due to advanced degrees. With this in mind, let’s talk about student loans and how you can keep them at manageable levels, so it does not negatively affect your future.

Mindful Spending

If you are currently in college or are considering going back to school for an advanced degree, here are a few ideas on how to lower your costs of tuition:

  • Consider starting your first two years at a community college. These schools are often inexpensive compared to more prominent universities. Community college can be an excellent way to save money until you are ready to transfer to the university of your choice.
  • Utilize scholarships and grants. Once you are accepted, consider applying to as many scholarships and grants for which you qualify. These financial aid options can be a great way to make college more affordable.
  • Search for books and supplies using alternatives to your school’s bookstore. Consider searching for textbooks online or find a textbook rental option near your school. Often, you can find them used and much cheaper than what the university charges.
  • Only take out what you need in student loans to avoid more debt than is necessary.
  • Consider making payments towards the loans to save interest while you are still in school. Whether through a job or an internship, paying as much as possible towards your student loans can make a significant impact.

Create a Payment Plan

Creating a payment plan is a great way to get started on the journey of paying off student loans as fast as possible. Here are a few ideas to create an effective payment plan:

  • The first thing to do is evaluate all of your loans and review your payment options. Learn about and understand your interest rate, minimum monthly payment, and payment plan.
  • Next, write down your goals on when you would like to have your loans fully paid off. Consider using SMART goals, which are: Specific, Measurable, Attainable, Relevant, and Time-Bound. By utilizing these parameters, paying off student loans can be worked into your budget easily. Then, write out your monthly budget and work your payments into it.
  • There are also options you can use to discount your student loan interest, such as setting up automatic payments through your debit account. Find out which options are available to you.
  • Once you set your goals and budget, the next step is to stick to it and reevaluate it every month. Reviewing where your money went will allow you to see where things went well and which areas need work.
  • Apply additional income towards your student loans to pay them off even faster. You could achieve this by getting a raise at work or a part-time job.

Utilizing these methods will ensure that you are mindful while you are in college and stick to a payment plan and budget once you graduate. Student loans do not need to be a massive burden on your life, and by being proactive, it can make a big difference in the long run.

Budgeting Tools That Millennials Love

Use an app such as Mint, Simplifi, or Dave Ramsey’s Every Dollar. These apps can consolidate your accounts and break down your expenses into categories, making things easier to view. They can also send you alerts when your balance is low, or you have upcoming bills. We have found www.studentloanplanner.com to be an excellent resource for managing student debt.

Eliminating student debts allows for more freedom to save and invest for retirement. If you are looking for information on self-directed IRAs, www.midlandtrust.com is an excellent resource to start. Or, call us at (239) 333-1032. We would be happy to discuss our services with you and how you could incorporate self-directed IRAs into your investment portfolio.

MIDLAND TRUST IS NOT A FIDUCIARY: Midland’s role as the custodian of self-directed retirement accounts is non-discretionary and administrative in nature. The account holder or authorized representative must direct all investment transactions and choose the account’s investment(s). Midland has no responsibility or involvement in selecting or evaluating any investment. Nothing contained herein shall be construed as investment, legal, tax, or financial advice or as a guarantee, endorsement, or certification of any investments.