Note: The opinions and advice expressed in this article are those of the author and do not necessarily reflect those held by the American Psychology Association (APA).
Psychology professionals face a unique challenge in the health-care industry—the cost of their degree can be extremely expensive in relation to their early career salaries.
According to a recent study by the APA, the median graduate debt load was $110,000. Unfortunately, that number excludes undergraduate debt completely. Loan amounts of that size can have drastic effects on your career path, so learning how to effectively manage loan debt after college is essential.
Here are my tips for effectively managing student loan debt after graduation...
Make payments as soon as possible: Many of the various lenders (both federal and private) allow a grace period after a student graduates. This is designed to give the borrower time to secure a job before making payments—but don't be fooled by the word "grace." The fine print will tell you that interest will still accrue on the loans during the grace period. That means you're taking on more debt, often times without even realizing it. I've had plenty of readers tell me how surprised they were to see their new loan balance when they finally made their first payment. The more money you borrowed, the faster the numbers start to pile up. Be proactive and make payments as soon as possible, even if it means interest-only payments to keep the loan amount closer to what you actually graduated with!
Fully understand your loan responsibilities and terms: The vast majority of student loan borrowers have no idea how their loans actually work. Student loans can range widely in both the interest amount and the repayment terms. If you want to effectively manage your loans after college, you'll need to do more than just make the minimum payment every month. Take a look at your loan terms and find out:
- How extra payments are applied to the loan principle amount
- The interest rate of the loans
- Repayment term length
- Possible penalties that result from missed or late payments
- How the interest is calculated on the loan amount
Understanding the basic structure of your loans will help you make important decisions later that could save you money. It's impossible to know if you will save money through a refinance if you're unsure of your current interest rate or how long the loan terms are!
For more MillennialMoneyMan (M$M) tips, read the full article here.
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