Tips for New Grads With Student Loans

By Mike Brody/ MYFOX NATIONAL

As college graduates head out into the workforce this year, many face the prospect of limited job opportunities and big student-loan debts.

The six-month grace period between the end of college and the date when student loans need to start being repaid may not be enough for some, but student-loan experts have some tips to help ease the burden.

• Find Out How Much You Owe -- As soon as they can, new grads should assess their financial situation and determine how much they actually owe, financial planner Rebecca Schreiber advised. "A lot of students, if they're like me, signed whatever the [financial] aid department put in front of them and a lot of people have no idea what they owe," Schreiber told Fox Business. She added that grads should set up a budget once they've determined their debt total.


• Pay As Much As You Can -- Don't just pay the minimum. If you can afford to pay more, you should pay down the loan as fast as possible. Any payment above the minimum will lower the debt burden over the long haul. For example, a $20,000 loan at 6.6 percent interest would end up costing $27,463 if the standard $228 a month was paid over a 10-year period. If an additional $50 was added to each payment, the loan would be paid off in just 8 years, with a total cost of just $25,655.


• Consolidate -- Loan consolidation, which creates a weighted average of a student's interest rates, is also something new grads should consider. New rates are set in July, so experts advise waiting until then to get a lower rate. "Some people [with PLUS loans] are getting an 8.5 percent rate, and the maximum rate under a consolidation is 8.25 percent," said Ken Clark, a certified financial planner and a college savings guide with About.com. "So if you go from 8.5 percent to 8.25 percent, it's probably going to save you $1,000 over the long haul."


• Check Out Loan Forgiveness Programs -- Some employers in in-demand fields such as nursing and teaching will pay back employee student loans if they agree to work in an area where there is a need for their expertise for several years. New legislation also goes into effect in July that will launch the Income-Based Repayment [IBR] program, which will cap some borrowers' student loan payments to a low percentage of their income, and offers student loan forgiveness to people who work in public service jobs, including jobs in nonprofit and government, for more than 10 years.


• Use Savings Programs -- Free programs such as UPromise can be helpful. UPromise allows you to set up an account and register your credit cards with that account so participating retailers can contribute small amounts of money to your account when you shop in their stores. Small money-saving programs can add up to big savings.