Student loan repayment arrives quickly

Congratulations! You’re a college graduate. You’ve acquired a degree that can serve as the foundation for your career, an accomplishment that nobody can ever take away from you.

But if you’re like many American college students you may have relied on financial aid such as student loans to get to this point. With commencement behind you, you’ll have six months before Uncle Sam and your lender(s) require you start repaying these loans.

Here are some tips on how you can prepare for those monthly payments:

Make payments to yourself

Let’s say you’ll need to start making monthly payments on a student loan of $25,000 over 20 years. That’s an average payment of $104 per month. For the six months leading up to your first payment, put that payment amount in a savings account instead of spending it. By training yourself to make these monthly payments now, you’ll start to develop the discipline that you’ll need to pay off these loans (and will have saved six months' worth of payments in case you need them).

Figure out a repayment plan

There are a variety of repayment plans available depending on your lender and based on your economic and employment situation. The Office of Federal Student Aid offers eight repayment plans. Some require a large upfront payment while others offer a low payment to start and higher payments as the loan starts to mature. Others are income dependent and vary based on factors such as your current employment status or number of people in your household. Check out the full list of repayment options online.

Understand that if you can pay, you have to

There’s no way of avoiding repaying student loans. It is part of the promissory note you signed when you took on the student loan. If you don’t start paying, the federal government has the authority to garnish your wages and any tax refunds. Remember, there is no statute of limitations on student loans, so these loans are with you until you pay them off (or until you die). And it can get ugly, as this story of man who owed a few thousand dollars delved into an escapade with the U.S. Marshals.

Travis Credit Union members who are starting their first job and need financial advice have access to free confidential financial counseling through our BALANCE Financial Fitness Program. Visit BALANCE for more details.

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