(InvestigateTV) - Student debt hit a record high in 2018 according to a new report from the Institute for College Access and Success. The average bachelor’s degree holder now owes about $29,200 in student loan debt, according to data from the Federal Reserve. That’s up 2% from the class of 2017; the average that year was $28,650.
For new graduates, the first payments on those loans are almost due.
If move-in day at colleges around the country is a milestone, then graduation is the pinnacle. It’s also the time the clock starts ticking on how much that hard work really cost: The six-month student loan grace period.
One Virginia Commonwealth University freshman, Laceilea Kornfield, said she knows she’ll owe about $100,000 coming out of school.
“Financial aid helps a lot. I’ve gotten some grants, but the loans I will have to pay back,” Kornfield said.
Freshman Caroline Gryder’s debt after graduation will be about $80,000: A number that’s scary for her.
“Absolutely. I don’t know how I’m going to live. Like, be able to have a job and support myself with all this money I have to pay," said Gryder.
NerdWallet Personal Finance Expert Kelsey Sheehy knows the first loan payment can be daunting if you’re not prepared. She said your most important step is being proactive and advises you to “learn your loan."
“Before the grace period ends, look up who your student loan service is, what your total balance is, what that first payment is going to be and what your payment options are,” Sheehy said.
That information can all be found on one government website, the National Student Loan Data System. From the site, just click on “my student data download.”
You have a six-month grace period after you graduate college, but if you start paying early Sheehy said it will help lower the overall balance and save on interest.
If you can’t get that first job out of school or if you’re headed to grad school, you do have the option to defer your loans. You also have the option of forbearance if you’re having trouble making payments, but Sheehy said this should be a last resort.
“If you look at that statement, and the amount is just too high, it’s not feasible, look into income-based student loan repayments,” Sheehy said.
That type of plan can cut monthly payments in half in some cases. The trade-off is it’s going to take longer to pay back that loan, and you’ll accrue more interest.
“It can feel really complicated and really overwhelming, especially when you’re staring down a big student loan balance,” Sheehy said.
That’s why a lot of people turn to companies for help with their debt, but this is where she said you need to be careful.
“There are hundreds of companies out there that are preying on struggling, overwhelmed student loan borrowers. They’re going to offer to lower your student loan payments or to lower your interest rate. They will even promise you loan forgiveness,” Sheehy said.
There’s nothing wrong with paying for help, she said. It’s kind of like paying someone to do your taxes, but these are also all things you can do for free yourself.
Whatever you do, Sheehy said not to just ignore your debt. Five million Americans currently have student loans in default according to data with the Federal Reserve. When a student loan goes into default the government can keep your tax refund and even garnish your wages.