Many college seniors seem to reach a state of denial when it comes to their impending graduation. This seems like quite a dilemma for newly graduates who need to get on track as soon as possible with a job and steady income. One aspect of graduation is student loan repayment which serves as an incentive to getting on track faster than usual.
For many, these student loan payments are in the front of every graduates mind. Some graduates are working as fast as possible to pay these loans off in the shortest amount of time, but lately, finishing payments as early as possible may not be the smartest move for a new adult.
A graduate has more problems to consider than making student loan payments; for instance, they must start thinking about purchasing a house or saving up for retirement. While paying off student loans immediately seems like the right move, focusing on these other aspects are equally as important for developing a successful financial standing.
Just like student loan payments are affecting parent’s retirement funds, these payments undoubtedly create a significant impact on the starting retirement fund of a new graduate. To put this in perspective, a graduate who decides to pay off their loans within less than half the time of their payment term loses a potential six figures in savings by the time they reach sixty years old.
The trend towards devaluing the significance of early retirement savings is only growing; right now, about half of new graduates claim to shift their attention to student loans instead of retirement. So what needs to be done in order to correct these mistakes?
New graduates must begin to understand the importance of saving early on as well as the folly of eliminating a loan within a couple of years. Repayment plans are stretched out over periods of ten years in order to alleviate overall financial burdens. Instead of cutting this payment period short, students are encouraged to utilize the full time period.
Why pay more over time? So you can save money for other expenses like retirement or mortgage payments today. There are various ways to reduce interest payments over time such as qualifying for the best student loan refinance lenders; these tools help reduce overall loan expenses which provides space for other financial necessities. Calculating the overall expense of the loan is another extremely important consideration which can be done with various calculation tools found on different loan sites such as College Ave.
These considerations comprise an important part of working and saving after college. They involve making decisions that require insight over time. Obviously, student loans are a burden, but there are many ways to reduce their impact on life. Reducing their impact allows new graduates to save for other things rather than expending early income needlessly.