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Graduating With Student Debt? Here Are 5 Things You Need To Do Immediately

Brett Holzhauer
May 7, 2019

It’s officially graduation season, an undoubtedly exciting time when hundreds of thousands of college students across the country are set to walk across the stage and take their first steps into the real world.

What does that entail? Among other things, it means finally facing the reality of student debt. The average college graduate is now leaving school with nearly $38,000 in loans to pay back. Roughly 45 million Americans have some form of student debt. While I want to insert a joke about millennials and their obsession with avocado toast or the newest restaurant in town, this is no joking matter.

I personally have roughly $65,000 in student debt but am proudly tackling it with the help of my best friend (wife). Still, I spent the first two years out of college just scraping by and not making any real progress on my loans. Only being four years removed from college, I wish I would have done a few things differently right out of the gate.

If you are graduating with student debt and want to get a jump-start, this is what you need to do immediately.

1. Get Serious, Fast

If you are graduating with a significant amount of debt (I define that as over $20,000), do not procrastinate or pretend it doesn’t exist. The minute you’ve collected your diploma, that debt should become your number one priority. If you are extremely proactive about creating a plan to knock this debt down, your older self will thank you. If you procrastinate, you can bet that you’ll end up holding student loans until your retirement.

The minute you’ve collected your diploma, that debt should become your number one priority.

My student loan payments didn’t require payments until six months after graduation. During those six months, I took that time to look for a job and basically “chill”. Looking back now, I should have been finding any sort of short-term work to simply hustle and start paying down those loans while I was living at home. Which brings me to my next point…

2. Don’t Knock Living With Your Parents

Many people want to criticize college grads for moving back in with mom and dad. However, what those people fail to understand is just how much of an impact the rising costs of college have had on new grads.

If you have a good relationship with your parents and they are OK with you living at home for a while, do it.

If you have a good relationship with your parents and they are OK with you living at home for a while, do it. While it may be an adjustment from being on your own in college, it will ultimately make a big difference in your ability to pay your student loans back quicker.

Let’s say a potential rent payment is $1,000 per month. That is an extra $12,000 per year that you can use to pay down your loans.

Along with cutting back on your base expenses right out of the gate, making some extra cash to put towards your loans is always helpful…

3. Side Hustle Your Way Out Of Debt, The Earlier The Better

Living in the gig-economy means we have an enormous opportunity to pay down this dreadful debt. That being said, don’t get a gig simply to pay down your loans. You will dread every single day of it if that is the case. Get a gig you enjoy or one that will help you build your career.

If you enjoy painting, paint in your free time and then sell your art on Instagram or at a local art fair.

If you enjoy painting, paint in your free time and then sell your art on Instagram or at a local art fair.

If you enjoy writing, become a freelance writer. (I’ve been able to earn an extra ~$1,500/month doing this!)

If you enjoy shopping, become an expert Amazon/eBay reseller. (I’ve been able to earn an extra ~$200/month doing this!)

If you live in a vibrant/touristy city and love meeting new people, consider becoming an Airbnb experience guide around your city.

It will take extra effort and experimentation to find what works best for you. I tried being a Lyft driver for a few weeks and didn’t enjoy it all that much, so I bailed on the idea. I then became a freelance writer and hit my stride.

4. Your Bank May Not Be The Best Bank

It is pretty common for recent college grads to have the same bank account from when they were in high school – typically with their parent’s financial institution. However, that may not be the best option for you.

If your checking/savings account is not earning you a healthy interest rate, you should consider putting your money somewhere where it will earn you interest.

If your checking/savings account is not earning you a healthy interest rate, you should consider putting your money somewhere where it will earn you interest. This can passively help offset the cost of your student loans.

There is an incredible number of options when it comes to banks, so it can be difficult to choose the right one.

There are megabanks (i.e. Chase and Wells Fargo), local community banks, local credit unions, and then online banks with no physical branches (i.e. Chime and Aspiration).

These banks are constantly competing with high-interest rate offers and welcome incentives to become your financial institution of choice. Large banks typically give very little to no interest so be sure to analyze your accounts to see if you are earning interest. If you aren’t, find a new banking institution that will pay you.

I am currently using the following for banking:

  • Checking – Charles Schwab (Unlimited ATM fee rebates globally, and 0.40% interest. However, cannot accept cash deposits.)
  • Savings – Marcus by Goldman Sachs (2.25% interest)

I did a lot of research to the find best option for me, so make sure to add this to your to-do list post-college.

5. Move Up Or Move On

The economy is healthy and unemployment is extremely low at the moment, so it’s important to remember the “cards” are in our favor as employees. A few years ago, Forbes published an article titled “Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less”.

Take heed new graduates. Statistics have shown that people who are “job switchers” see their pay go up by 4.9% year over year, compared to 4.3% for “job holders”.

That may not sound like a lot, but right out of college, the difference tends to be larger.

My first salary out of college was $40,000. Two and a half years later, my salary jumped to $65,000, not including my bonus and benefits.

How many job hops did it take? Five.

While that sounds extremely volatile (it is), there’s a practical side to it, too. Employers are caring less and less about an applicant’s job history when it comes to tenure. We as a generation have learned that many employers don’t have much loyalty to us, so why should we have loyalty to them?

Not only should you be ready to switch jobs to make more money now to pay off your student loans, but you should also do it for your long term career earning goals as well.

Not only should you be ready to switch jobs to make more money now to pay off your student loans, but you should also do it for your long term career earning goals as well. Proactively push for a higher salary, because no one else will do it for you.

But on a more simple level, be engaged in what your money is doing for you on a daily basis.

Brett Holzhauer is a graduate of the Walter Cronkite School of Journalism and Mass Communications at Arizona State University. He enjoy writing about personal finance, travel, and credit card rewards. In his spare time, he enjoys traveling with his wife, eating questionable Mexican food, and watching college football.

Feature Illustration: Laura Caseley For The Money Manual

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