Are you a 2023 graduate facing the challenge of managing student loan payments during economic uncertainty? Learn valuable tips from experts on navigating this financial terrain, including having a solid plan, accelerating debt repayment, knowing your options, and accessing free resources.
Questions Answered in this Article
- How many tech layoffs have there been in the US in 2023, according to Crunchbase News?
- There have been more than 118,000 tech layoffs in the U.S. in 2023 alone, according to Crunchbase News.
- What is the advice of Betsy Mayotte, founder of The Institute of Student Loan Advisors, for new graduates regarding student loan repayment?
- Betsy Mayotte advises new graduates to understand the specifics of their student debt and have a solid plan in place for repayment, regardless of the economic climate.
- What advice does Barry Coleman give to new graduates with a job regarding student loan repayment?
- Barry Coleman suggests that new graduates with a job should accelerate their student debt repayment if they can make more than the minimum payment on their student loan, as this can save considerable money on interest.
- What should new graduates without a job do to stay current on their student debt?
- New graduates without a job should contact their loan servicer as early as possible, inform them of their employment status, and inquire about options to prevent delinquency. For federal student loan borrowers, various repayment options are available, such as income-driven repayment plans that can lower payments or moratorium, which temporarily suspends costs.
- Where can new graduates find free resources to help manage their student loan debt?
- Nonprofit organizations such as The Institute of Student Loan Advisors, the Student Borrower Protection Center, and the National Foundation for Credit Counseling offer free resources to help new graduates manage their debt.
Managing Student Loan Payments During Economic Uncertainty: Tips for 2023 Grads
According to Crunchbase News, a business publication, there have been more than 118,000 tech layoffs in the U.S. in 2023 alone. This is in addition to the collapse of two central banks and two federal rate hikes, making it a time of economic upheaval for the class of 2023, who will also have to face student loan payments. Barry Coleman, the Vice President of Program Management and Education at the National Foundation for Credit Counseling, states that this could be an overwhelming and confusing time for those beginning to repay their student debt. Coleman highlights the end of a three-year pause on federal student loan payments, legal challenges to federal student debt relief programs, and the impact of inflation on the job market as reasons why new graduates may feel uneasy. However, there’s no need for new grads to panic. There are ways to navigate the potential recession and the financial uncertainty that may come with it.
Have a Plan for Your Student Loans, No Matter the Economy
It’s essential to have a solid plan in place for your student loans, regardless of the economic climate, according to Betsy Mayotte, founder of The Institute of Student Loan Advisors. She advises that understanding the specifics of your student debt is critical to staying on top of payments. With a typical six-month grace period after graduation, Mayotte suggests gathering information on your loans before prices begin, including the types and holders of each. To avoid any unexpected financial burdens, Barry Coleman, Vice President of Program Management and Education at the National Foundation for Credit Counseling, advises new graduates to assess their expected income, expenses, and budget to determine how student loan payments will fit in.
Accelerate Your Student Debt Repayment If You Have a Job
A job provides more financial freedom and enables you to put more money towards your student loans if you’re already contributing to your emergency savings and retirement. Suppose you can make more than the minimum payment on your student loan. In that case, this is your opportunity to eliminate your student debt as quickly as possible, suggests Coleman, and save considerable money on interest.
Additionally, don’t underestimate the benefits offered by your employer. As many as 21% of employers offer free financial services as part of their benefits package, according to Jim Link, chief human resources officer for the Society for Human Resource Management. These services may include access to financial advisors at no cost to the employee, or even student loan repayment programs, which can provide additional support during economic downturns.
If You Don’t Have a Job, Know Your Options to Stay Current
If you find yourself without a job after graduation, especially during an economic downturn, it can be a daunting experience. However, you can take proactive steps to stay on top of your student debt, even with low or no income.
The first step is to contact your loan servicer, the company that manages your loans, as early as possible and inform them of your employment status, advises Coleman. Inquire about options to prevent delinquency, which occurs when you miss a student loan payment.
For federal student loan borrowers, various repayment options are available, such as income-driven repayment plans that can lower your payments, or moratorium, which temporarily suspends payments. However, interest continues to accrue during this period. However, it’s important to note that deferring costs can increase your total student loan balance. Once you secure a job, try to repay your student loan as soon as possible to avoid a significantly larger debt down the road, suggests Coleman.
You might consider exploring job opportunities with non-profit organizations or government entities if you have federal student loans. These positions could qualify you for Public Service Loan Forgiveness, which forgives your remaining student loan balance after ten years of qualifying payments.
Get Free Help Managing Your Debt
Free resources are available to help you manage your student loan debt, even during tough economic times. Nonprofit organizations such as The Institute of Student Loan Advisors and the Student Borrower Protection Center offer free assistance.
Suppose you need help figuring out how to pay off your loans faster or make monthly payments more manageable. In that case, the National Foundation for Credit Counseling can provide you with a counselor who can help you create an action plan, according to Coleman.
By taking advantage of these resources, new graduates can develop a solid plan for managing student loans that will benefit them in any economic environment, whether strong or weak.
Summary
- According to Crunchbase News, there have been more than 118,000 tech layoffs in the U.S. in 2023 alone, making it a time of economic upheaval for the class of 2023, who will also have to face student loan payments.
- The end of a three-year pause on federal student loan payments, legal challenges to federal student debt relief programs, and the impact of inflation on the job market are reasons why new graduates may feel uneasy.
- It’s essential to have a solid plan in place for your student loans, regardless of the economic climate, according to experts.
- Understanding the specifics of your student debt is critical to staying on top of payments.
- Gather information on your loans before prices begin, including the types and holders of each.
- Assess your expected income, expenses, and budget to determine how student loan payments will fit.
- Suppose you can make more than the minimum payment on your student loan. In that case, this is your opportunity to eliminate your student debt as quickly as possible and save considerable money on interest.
- Take advantage of benefits offered by your employer, such as free financial services and student loan repayment programs.
- If you find yourself without a job after graduation, contact your loan servicer, the company that manages your loans, as early as possible and inform them of your employment status.
- Inquire about options to prevent delinquency, such as income-driven repayment plans or moratorium, which temporarily suspends payments.
- Nonprofit organizations such as The Institute of Student Loan Advisors and the Student Borrower Protection Center offer free assistance.
- The National Foundation for Credit Counseling can provide you with a counselor who can help you create an action plan.
