Making a Plan to Repay Student Loans

Starting life as an independent adult is exciting — but also expensive. Not only do you have to wave goodbye to a chunk of each paycheck for taxes, you have to start paying your own bills for rent, utilities, food, transportation and even student loans.

If you aren't sure how to fit student loan payments into your new life, don't panic. Here's a simple guide for making a plan.

Don't Neglect Your Student Loans

Your student loans might not seem as important as other bills such as rent or your cell phone, but it's really important to make all your student loan payments on time and in full each month.

That's because payments of this debt affect your credit, and having a good credit score is crucial for everything from renting an apartment to getting a credit card.

There are two major ways your student loan payments can impact your FICO credit score.1 For one, 35% of your credit score is based on payment history. Paying your bills on time will build a positive payment history and good credit, while missing even just one payment can knock many points off your score. Another 30% of your credit score is based on amounts owed, meaning the less debt you owe in relation to the total amount of credit extended to you, the better. Paying down your student loans over time will improve your credit.

Budgeting for Student Loan Payments

You know how important it is to stay on top of your student loan payments, but how do these payments actually fit into your monthly budget?

The first step is to create a budget. It's not as hard as it sounds — and this handy walk-through and spreadsheet can help.

If you can't make your budget work with your student loan payments, look for ways to cut regular fixed expenses, such as ditching your car for the train or getting a roommate. Otherwise, you'll need to cut back on discretionary spending (eating out, entertainment, travel, etc.) or get a side hustle to earn extra cash.

Keep in mind that you won't be living on a tight budget forever. As you grow in your career and get better at money management, it should be easier to fit your expenses — including some fun — into your budget. And the good news is that most student loans come with a six-month grace period following graduation, so you can use that time to plan out your budget before the first payment is due.