How to prepare for student loan payments

Nearly 4 million college students will graduate by the end of 2022.

About 65% of them will leave with a degree and student loan debt.

The average student loan borrower owes about $29,000, according to the Federal Reserve.

And roughly 92% of it is from federal student loans.

The starting salary of a college grad is around $55,000.

Although federal student loan payments are on pause until the end of August, Financial Advisor Garret Fields recommends putting them in your budget now.

“The first thing that you need to do is look at your entire finances. You need to get a good foundation of where you currently are and a good idea of what those payments are going to be monthly before you can move forward,” Fields said.

Try the 50-30-20 rule. About 50% of your budget goes to essentials, like rent, food and other bills. Another 30% goes to non-essentials and fun stuff. The other 20% should go to savings.”

“Sometimes, you know, being responsible and cutting back on the fun because the finances aren’t there is what you have to do,” Fields said. “We understand that you’re a college student and you’re not necessarily making a ton of money. That’s OK. You don’t need to act like it. You don’t need to act like you’re, you know, balling out.”

But beware of lifestyle creep.

That’s when your expenses increase at the same rate as your salary, which means the amount you’re saving and investing stays the same.

If you don’t think you’ll be ready for your student loan payments, contact your servicer and look into income-driven repayment plans now.

Federal loan payments are paused until Aug. 31 but President Joe Biden could extend that deadline.