Dear Carrie, I’m feeling overwhelmed by my student loan debt. What can I do?
First, understand that you’re not alone. Seventy percent of students graduate with an average of over $33,000 of debt, and a lot of people have much more. It’s a huge burden, especially if you’re just starting out on an entry-level salary. But here’s some perspective that might make you feel a little better. Students loans are what we call good debt. Not only does it carry a lower interest rate than other debt, but it may be tax deductible and could possibly increase your earning potential. Here are some road rules that help if you’re dealing with student debt. First, never ever miss a payment or become delinquent. If you can’t make your monthly minimum payment, call your lender and try to negotiate an extended repayment plan with a lower payment that fits in your budget. Second, think about consolidating your student loans to get an overall lower interest rate. But read the fine print, and make sure consolidation is in your best interest. Last, if you’re already paying the required minimum on your student loan and have some extra money, here’s how to use it. Contribute enough to your 401(k) to capture your employer match. Start to build an emergency fund. Pay down any credit card debt, which is what we call bad debt. And do all of this before you pay more on your student loan. Remember, you’re not alone. Even if you’re carrying the burden of student loan debt, don’t lose sight of the bigger picture. You’ve made an important investment in your future, and I’m sure it will pay off. For more suggestions, check out my Ask Carrie column.
