According to Crunchbase News, more than 118,000 US tech workers will be laid off in 2023 alone. This comes on top of two major bank failures and his two federal rate hikes. The 2023 class will graduate to this financial turmoil while facing another variable: student loan payments.
This can be an overwhelming and confusing time for those trying to start paying off student debt, said Barry Coleman, vice president of program management and education at the National Foundation for Credit Counseling. increase. Coleman cites his three-year moratorium on federal student loan payments, legal challenges to the federal student debt relief program, and the potential impact of inflation on the job market as reasons fresh graduates may feel uneasy. is listed.
But new graduates don’t need to panic. Here’s how you can weather a potential recession and the economic uncertainty that comes with it.
Plan for student loans regardless of your financial situation
Betsy Mayotte, founder of The Institute of Student Loan Advisors, says understanding student debt is one of the best strategies for keeping loans, no matter how the economy works. said.
After graduation, you usually have a grace period of six months before you need to make your first student loan payment. By the time this first payment is due, gather details such as loan type and loan holder, advises Mayotte.
Then know how your expected income, expenses, and student loan payments fit into your budget, says Coleman.
If you have a job, pay off your student loans early
If you find a job, you will be more flexible. Having a steady income gives you the opportunity to invest more money in your student loan debt — if you’re already contributing to your retirement or emergency savings.
For borrowers who have the ability to repay at least the minimum student loan repayments, this is an opportunity to pay off their student loans as soon as possible, Coleman said.
And don’t miss your employer.
Twenty-one percent of employers offer company-paid financial services as part of their benefits package, explains Jim Link, chief human resources officer for the Society for Human Resource Management. Programs can include giving employees free access to financial advisors and student loan repayment programs. Both may offer additional protection in a sluggish economy.
If you don’t have a job, know your options for staying up to date
Graduating without a job offer is scary. Especially when the economy is expected to slow down. But even if you have little or no income, and even in a recession, you can take steps to get over your student debt.
Let’s start with a loan servicer, a company that manages loans. Let them know you’re not hired as soon as possible, says Coleman. Ask what options they have to avoid being late. Delinquency means missing student loan payments.
Federal student loan borrowers have many repayment options, says Moyet. You can even pay $0. Income-based repayment planor temporarily stop payments due to student loan deferrals.
Note that interest may still accrue during the deferral period. This will increase your total student loan balance. Once you’ve got a job and can afford to pay off your student loans, pay them off as soon as possible to avoid facing significantly larger debt down the road, advises Coleman.
Also, while you are looking for a job, if you have federal student loans, it may be worth considering a career at a nonprofit or government agency. there is a possibility Public service loan exemption — Any remaining student loan balance will be forgiven after 10 years of eligible payments.
Free debt management help
Even if the economy is sluggish, you can get student loan help From organizations like The Institute of Student Loan Advisors and Student Borrower Protection Center that don’t charge anything.
Whether you’re looking for a way to pay off your loan faster or cover your monthly payments, nonprofits available through the National Foundation for Credit Counseling can connect you with a counselor and develop an action plan. It helps create, says Coleman.
No matter how the economy unfolds, new graduates have a strong plan for student loans. This is useful in both tough and strong economic times.
This article was written by NerdWallet and originally published by The Associated Press.