I’m a 22 yo senior graduating in a couple weeks (STEM major) at University, and starting a full-time job at around $105k right after graduation. This is more money than I could’ve ever imagined, so I’m trying to be really intentional with my financial decisions early on.
During college, I worked consistently and was able to build up some savings. Right now I have about $1k in checking and around $12k in savings. I’ve been fortunate enough to not really stress about money during school, but I still want to make sure I’m setting myself up well long term. The one thing I do have is about $8.5k in student loan debt. I have never expected my parents to help me with my college expenses and tuition, so I have worked hard to try to pay off as much as possible.
The interest rate is 4.5%
The federal student loan simulator suggests something like $94/month for 10 years, which is obviously very manageable but I don’t like the idea of carrying debt for that long. I will be moving away from home, so obviously cost of living is going to increase but I don’t have any other debt so I think I’m in a really good place.
Also, for context, I’ve been living pretty frugally around $1.1k a month covering rent, food, fun, and utilities while four years into school. I don’t really have a strong urge to suddenly increase my spending after I graduate because I don’t want to waste money or fall into lifestyle creep.
Right now I feel stuck between a few options. I could just pay it all off immediately and have less in savings and be done with it, or I could pay it down aggressively over a few months.
My main goals are to build long term wealth, avoid making dumb financial mistakes early in my career, and start investing more once my full-time income kicks in.
Any advice is appreciated.
Student loan debt advice for graduating senior
byu/ElectricalHead7088 inStudentLoans
Posted by ElectricalHead7088
4 Comments
Pay it off with your savings and then set a budget with your new income. Great job!! You’re doing well and asking the right questions.
Step 1 is emergency fund and step 2 is paying off debt. Are you going to continue living off $1100 with your new job? Will you need a car or an apartment near your work? Regardless, figure 6x monthly expenses and don’t touch that. Keep it stashed. Everything beyond it goes to debt. You’ll be cleared in less than six months.
Assuming your credit is strong, pay it off and be done. If you need to build credit, pay it off from your savings so that it will be paid off in 2 years while contributing to your savings from your new job. You will want to max out any retirement match your new company offers and then make sure to put some of your money in checking and the rest in savings.
Pay it off – I’d use your savings and then start rebuilding. Being debt free is the best way to start out.