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How to manage the burden of post-college debt.

A college degree isn’t the only thing most American students walk away with after graduation. They often enter the “real world” with a mountain of debt from years of student loans. And digging their way out of that debt on entry-level salaries can be harder work than studying for all those exams.

And it’s a not-very-exclusive club. Of the nearly 20 million Americans who attend college each year, close to 12 million ― or 60 percent ― borrow annually to help cover costs, according to CNBC.

manage-student-debtIn fact, Americans owe a record $1.2 trillion in student loan debt, second only to mortgages when it comes to household debt, according to the Consumer Financial Protection Bureau.

Here are 8 tips to help college grads get out of the red and back to black:

  1. Consolidate loans if possible: With all the types of student loans available, including federal, state, institutional and private, it’s easy to accumulate multiple loans by the time you graduate. And it’s even easier to lose track of them all. It may be possible to consolidate some or all of your loans, which could help simplify your finances and reduce monthly payments. Get some help from loanconsolidation.ed.gov.
  2. Try not to miss a payment: Even if you’re paying the bare minimum, the last thing you want is to make a late payment or miss a payment altogether. Not only will you pay more in interest charges for late payments, it may also lower your credit score. Try to practice good financial habits early on and always make your payments on time.
  3. Make payments automatic: The best way not to miss a payment is to make them automatic. Set up automatic payments with your bank or have them deducted from your paychecks. If you don’t see the money, you won’t miss it.
  4. Build a budget: You’re going to have to get organized, and you may need to tighten the purse strings, so it will help to have a budget. Write down your income and all your expenses, including loan payments. If you prefer an electronic system, tools like mint.com or, if you’re a BMO Harris accountholder and use BMO Harris Online Banking®, BMO Harris Total Look® can help you keep track of your accounts, income and expense. Don’t just create a budget and forget about it ― check back weekly or monthly to make sure you’re on track and make any necessary adjustments. Tools like this loan repayment calculator can help you figure out how much money you’ll need to pay each month to pay off your loan in a certain amount of time.
  5. Take advantage of exit counseling: The federal government requires schools to conduct exit interviews with all students who receive specific types of federal student loans. In your interview, you should find out about your rights and responsibilities as a borrower, including information about various repayment plans and deferment options. Exit counseling can be a great learning opportunity and help you create a repayment plan after college. Check out this link from studentloans.gov for more information.
  6. Don’t be an ostrich: Debt can be daunting, and it can be tempting to stick your head in the sand and hope it will just go away. But ignoring it will only make it worse. Stick to your budget, keep making your minimum payments and speak to your banker to see what other options you have to manage your debt.
  7. Do pay larger chunks whenever possible: Minimum payments are a must, but they just chip away at the high interest rates while barely touching the principal. If you ever have a larger amount of money available from a work bonus, gift or investment, use it to pay down your debt. The lower your loans, the less you’ll be paying toward interest and the sooner you’ll be able to pay down the principal.
  8. Talk to your boss: Depending on your job, you may be able to ask your boss for a compensation package where a company will pay down a student loan in exchange for a lower salary. And you may qualify for employer assistance in paying back your loans if you work for the government, in certain branches of the U.S. military, in nursingpublic service or if you are a teacher.

Remember, paying off your student loans sooner will literally save you thousands of dollars in interest over the years, so make that your number one goal after you graduate. As daunting as the debt can be, don’t be discouraged. Be confident that, with a plan in place, you’ll be able to kiss your student loans goodbye.

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