How to Handle Your First Summer with Student Loans


This is a guest post by Kaitlin Butler.

Graduation has come and gone, and for many graduates summer is a time to celebrate their big accomplishment and turn their attention to job searches and catching up on time with loved ones. While all of that is important, the distractions and nice weather can make it tempting to forget about student loans. We advise just the opposite. Summer is a great time to think about your loans. While you might be tempted to forget about them until later, there are benefits to thinking about your loans now – like saving thousands of dollars. (The added peace of mind is no small reward either.)

Here are three reasons to tackle your student loans today instead of waiting until the fall:

1. You don’t need to wait for your grace period to end in order to start repaying or refinancing your loans.

Many people believe you have to wait for your six-month grace period to end in order to begin repaying your loans, but that’s not the case. The fact is, that approach can cost you – because interest is still accruing on many student loans during that time, only adding to your balance.

So how to begin? Start by making sure that your balance is correct and that you are clear on your repayment plan.

And don’t forget, any loan payments you can make during this grace period come with the added benefit of reducing your interest before it capitalizes, which could potentially save you thousands in interest payments over the life of your loan.

You might find that you’re struggling to have enough money to pay. If so, it will help to make a budget. Getting all your monthly income and expenses down on paper (or a spreadsheet) is an essential starting point for both day-to-day money management and setting your short- and long-term financial goals.

If you’re still job searching, or not yet sure of your exact postgraduate compensation for the fall, research the typical cost of living and salary figures for your target job, in your target location, in order to get an accurate as possible estimate.

Now take a step back and compare your budget to your loan payments. You know exactly what your interest rates are and what your loan payments will be. Can you meet your payments? With your budget in hand, determine your ideal monthly payments.

2. Even if you don’t start paying anything now, you can still refinance and honor your grace period.

A handful of lenders will actually honor your grace period even if you refinance within this six-month span (CommonBond is one example). This means you can accrue interest at a lower rate on your newly refinanced loans now, without worrying about having to refinance them once your grace period ends.

Refinancing is a chance to pick a new loan at a rate and term that’s right for you, with a lender you really enjoy working with – maximizing the investment you made in your education. Need a handy way to see how much you can save through refinancing? You can use this calculator to review your potential savings on a monthly basis as well as over the life of your loan.

3. Your financial aid office will be highly accessible over the next few months.

Another advantage to tackling your loans now as a fresh graduate is that you’re still closely connected to your financial aid office. If you discover any issues with your loans, reach out to the office promptly and ask for assistance. You’ll beat the “back the school” rush and get your finances in order well in advance of grace period.

With your loans in order, you can better set your financial goals. By choosing the loans you want now through refinancing, you’ll free up extra savings so that you start tackling your other financial objectives. Want to start investing? Here’s a starter guide for new graduates. Prefer to get rid of your debt completely? Ready for Zero’s tools can help you make a repayment plan (and stick to it).

If you’re juggling multiple priorities, from evaluating homeownership in the next few years to becoming debt free quickly, you may draw inspiration from how quickly one graduate decided to pay off his loans. No matter what path you choose, you deserve a big congratulations – you’ll have your student loans under control by Labor Day!

Kaitlin Butler is Content Manager at CommonBond, a student lending platform that provides a better student loan experience through lower rates, superior service and a strong commitment to community. She’s passionate about personal finance and savings (start early for retirement!) and her work has also appeared on LearnVest, Yahoo! Finance, and others.

Image Credit: Lafayette College

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  • Brian

    Great article. So glad I am on top of my loans and credit debt. I’ve been using Credit Sesame to get an edge financially.

    • Hi Brian, so glad you liked the article! And that’s great you are able to keep track of your loans and credit card debt using online tools. Keep up the good work!