There is no questioning that money spent on education is worthwhile, but after graduation, the thought of paying back your student loans can be overwhelming. No matter how much you borrowed or what your degree, repaying this debt can make it hard to establish yourself as a new graduate.
Taking control of your debt allows you to repay your loans on your terms. When you initially borrowed the money, you were young with little to no existing credit, which gives you fewer options. Refinancing can give you a lower interest rate or change the length of the loan. While student loan refinance rates vary depending on your credit score and other considerations, it only takes a few minutes to explore your refinancing options online and find the choice that works best for you.
After refinancing, you may find your budget is much easier to maintain and you can make progress in building the solid financial foundation you had in mind when earning your degree. Without excessive monthly payments weighing you down, you are free to set goals for your future such as purchasing a home or contributing to retirement.
How Debt Affects Spending
Excessive debt harms you personally, but it also creates larger issues. When you are pinching pennies each month, you spend less on other items. When a large portion of the population isn't free to spend, consumer spending drops, which hurts the economy. This creates a vicious circle, where businesses such as restaurants and clothing stores, have trouble keeping their doors open. When businesses close, the people that work there are left without work.
Using a large portion of your monthly income to repay debt also makes it harder to be self-sufficient. After graduating, you probably assumed you would be financially independent. In many cases, the combination of student loan debt and low entry-level salaries makes it a challenge to cover living expenses. This may mean remaining in your childhood home or accepting financial help from your family.
A Healthy Financial Picture is Important for Everyone
Having a college degree is nearly mandatory in today's workforce. Although you can find well-paying jobs without one, it is much more difficult. Using loans to pay for your education is a smart move, as it allows you to focus on academics rather than juggling school and work. When school is your only commitment, you may be able to graduate a semester or more early.
Repaying these loans does not have to be painful. Refinancing allows you to change the terms to something that works with your current income. You can then dedicate funds to not only paying off your loan but for retirement and other savings as well.
A strong financial picture is important for you, but it is also a gift for those who care about you. Knowing that you can meet your needs and have money set aside for emergencies provides peace of mind to your loved ones. By having control of your finances, you may be in a position to provide help for them in the future.