Last year, student loan debt eclipsed total credit card debt for the first time. Graduates are leaving school with an average of $24,000 in loans, according to the Chicago Sun Times.
With the United States adding fewer jobs in May than experts originally predicted, the outlook for new grads to land a job may not be as encouraging as they'd hope. Without a steady source of income and a looming debt burden, it is important for these individuals to understand some basic ideas about credit and repaying their loan.
Two things new grads should understand about their student loans is the amount of time they have before their first payment is due, and the interest rates attached to their balances.
Individuals who secured a Stafford Loan have a six-month grace period after graduation before their first bill is due, which means they should be creating an effective and responsible payment plan during this time. Moreover, although deferments can be granted in certain circumstances that pushes out that start date a bit farther, it's important for students to remember that repayment can begin sooner than expected. When creating a payment strategy, it's important that borrowers account for interest, as it can become an incredibly costly expense.
Grads who pay their loan bills on time and in full each month may think that they don't have any reason to check their credit reports, but this isn't true. Although making timely payments is a good way to improve a credit score, in some cases, lenders may misreport information about a person's account, which negatively harms his or her three-digit number.
However, by working with a credit repair attorney to investigate and challenge any inaccurate or problematic marks, grads may be able to obtain the credit score they deserve.