Garbage Pieces of Student Loan Advice & What You Should Be Doing

Student loan misinformation abounds. It can be hard to tell what’s solid advice and what’s garbage. Read on for three pieces of advice you can throw away and three pieces you need to listen to.

1. Garbage Advice: Don’t pay on your loans until you have to.

People are telling you to take advantage of the six month grace period or take advantage of forbearance.

Good Advice: Start making at least income-based payments.

You can set up an income-based repayment plan and make monthly payments that won’t crush you. Here’s the thing, if you have a job from your college degree you should be paying on your loans. If you wait, you’re shooting yourself in the foot and accruing tons of interest and you’re also delaying your eligibility for forgiveness (most require a certain number of payments).

2. Garbage Advice: Put as much money as possible into retirement. Or Wait to contribute to retirement until your loans are repaid.

Both of the pieces of information are lacking a middle ground.

Good Advice: Put the right amount of money into retirement.

The younger you are when you put your money in retirement the more opportunity you have for that money to accrue compounding interest. That means you need to put some money away now. If you have an employer-sponsored plan like a 401K you should contribute at least enough money to get their match. Your employer’s match is free money, don’t leave it on the table. However you shouldn’t contribute more than that if your goal is to repay your loans as quickly as possible. You can guarantee that you will accrue interest on your student loans while you can’t guarantee the performance of the stock market.

3. Garbage Advice: Don’t worry about it, student loan debt is good debt.

Let’s get real, no debt is good debt.

Good Advice: Know your number and make a plan for repaying it.

It’s the easiest thing to do, to know your total debt load. It just happens to be one of the most stressful things. Go look at your loan balance and commit the number to memory. Check on it every month and notice what happens to your total amount with time and making payments. What happens when you make extra payments? Knowing your number is the very first step in building a repayment strategy that fits your goals.

There you have it, a little light in the murkiness of student loan debt advice. What do you think? Anything you disagree with? Want to share the worst advice you’ve ever gotten? I’d love to hear about it in the comments below or on the Repayable Facebook Page.