New grads, take heed. You’re freaking out about the escalating price tag of your education and that’s totally fair. But don’t panic yet. Take a step back to acknowledge and celebrate your accomplishment. Then plan your strategy for a sane repayment plan and fight back against the fear and doom.

Here are 4 steps to getting yourself on the right track to a secure financial future. Starting now will set you up to avoid crashing and burning in a pile of tears and terror in a year or two.

1. Don’t ignore your mail

So many grads can’t even bring themselves to open their first loan statement, let alone log in and look at the big fat number staring at them from their laptop screens. But avoiding the inevitable will not make that number smaller. In fact, you could make a bad situation even worse. Step one: open the envelope. Know exactly what you owe. The devil you know, right? If you have multiple loans, track down the names of your servicers and make a list of each, detailing the interest rates and balances. This will be crucial to smart planning.

2. Be wary of the grace period

A sixth month grace period does not mean you don’t have to think about your loans for six months. Remember that your loans will continue to accrue interest—and lots of it—while you’re merrily trying to figure out what you want to be when you grow up. The grace period exists mostly to benefit those who may need the extra time to get set up in their post graduate careers. Treat it as such.

The longer you wait to start repaying, the more interest will accrue. And that interest will be added to your principal balance as soon as your loans come up for repayment. The longer you wait, the worse it gets. Step two, in a nutshell: use your grace period if you need it, but consider making payments against the interest while you wait.

3. Keep your term as short as you can

It may seem like a good idea to pay your loans back in 25 years instead of 10. After all, a lower monthly payment number is a seductive thing. But just remember that the interest clock is not going to slow down for you. You could end up paying back almost double what you owe if you take a significant amount of time to repay. The Student Loan Repayment Calculator online is your friend. You should never choose repayment terms that you can’t handle, but you should chose the fastest repayment timeframe that makes sense for you. It will save you money!

4. Consider refinancing

One way to lower your interest rates, particularly across a wide range of loans from different servicers, is to go through a refinancing company. You can always make an inquiry with a company like SoFi without committing to a refinance. In most cases, refinancing means a lower interest rate and a lower amount paid in the end. If you can guarantee total savings like this, it’s almost always worth it to consolidate. Be careful, however, of your particular situation and how it qualifies (or doesn’t) you for different loan forgiveness plans. If you don’t qualify for loan forgiveness or income-based repayment (often requiring you to pay a lot more over a longer period), a private lender is always an option.

Repaying your student loans can seem like a prison sentence. And in some ways it is. But it’s always a better idea to have more information, to be more involved, and thereby more empowered. Be proactive and put your best foot forward. Future you will thank you!









