Graduating from college is a momentous occasion and one that any student should be incredibly proud of doing. As you leave the confines of your college campus and begin your life in the “real world,” the financial burden of graduating with student loan debt becomes reality. Sitting at around $1.48 trillion nationwide, student loan debt can be scary to face alone - but that doesn’t mean it should be avoided.1 If you’re a recent graduate with a significant amount of student loan debt left to repay, here’s what you can do right now to help.

Tip #1: Focus on Building Good Credit

For some recent graduates, paying back federal student loans will be their first entry into building credit. In fact, only 57 percent of undergraduates reported having a credit card.2 If you have gone without a credit score of your own thus far, paying back your student loan debt on time and in full is critical. Federal student loan lenders report to the three major credit bureaus - Equifax, TransUnion and Experian. If you miss a payment or pay late, this can negatively affect your overall credit score.

Building good credit now is incredibly important as you being navigating life in the real world. Good credit is needed to secure loans like auto loans and house mortgages. If you don’t have a credit card yet, consider applying for one and using it to help further your credit score. Paying your credit card bill monthly can help boost it.

Tip #2: Always Pay On Time

Paying your bills late (including student loan repayments) can not only have a negative impact on your credit score, but it can cause you to incur late fees or penalties. Pick a certain time each month to make a payment, and set a recurring alarm on your calendar. If you have the option, consider setting up an automatic payment plan - which would allow you to set it and forget it. This would eliminate the possibility of forgetting or missing a payment. 

Tip #3: Consider Reprioritizing Your Debt

This may sound counterintuitive, but maintaining your student loan debt and focusing on other debt types could be beneficial in the long run. While you don’t want to let your student debt payments lapse, you may want to funnel anything extra toward other debts with higher-interest, such as personal loans or credit cards.

High-interest debt can get out of hand quickly because outstanding amounts earn interest at a much higher rate than low-interest debts like student loans, auto loans and mortgages. Paying off your credit card amount each month will help you avoid paying unnecessary interest and help avoid hikes in interest rates.

It’ll take time to pay off your student loans. But following these positive practices can help you establish good credit, maintain your debt-to-income ratio and help prepare for other big purchases like a car or a home. Developing healthy financial habits now can serve as a foundation for financial wellness throughout the rest of your life.

1. https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q2.pdf

2. https://wallethub.com/edu/cc/credit-card-statistics-for-college-students/25535#:~:text=Majoring%20in%20Money)-,Students%20with%20Credit%20Cards,compared%20to%202013%20(30%25).

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.