3 Smart Student Loan Strategies for New Graduates

Vanessa has finished a graduate program in healthcare and is ready to start her career. But she cannot begin working until she passes a board exam and gets licensed, while her lender is expecting payments to start. That leaves a familiar question for many new graduates: how should student loans be handled before the first paycheck arrives?

That issue is not limited to healthcare. Many recent graduates face the same problem because a degree does not always lead to immediate income. For guidance, we spoke with Michelle Kruger, Ph.D., CFP, an author, educator and financial planner who focuses on helping everyday people manage their finances.

The encouraging part is that borrowers in this situation do have choices, even if they have not started earning yet.

1. Check Whether Deferment Is Available

If Vanessa does not yet earn enough to cover both everyday expenses and loan bills, Kruger says that is a common situation for new graduates. In cases like this, she recommends looking into deferred repayment options.

“Federal student loans usually offer a six-month grace period after graduation before payments begin,” she said. “Some private loans also provide grace periods, though interest still accrues.”

To help keep interest from piling up, Kruger suggests making even small payments during the grace period when possible, since that can reduce the total cost over time.

2. Review Income-Based Repayment Plans

Although Vanessa did not say what type of loans she has, Kruger notes that many federal borrowers may qualify for income-driven repayment plans such as RAP, IBR or ICR.

“These plans cap monthly payments based on income and forgive any remaining balance after a set term,” Kruger said.

Borrowers previously could consider the Saving on a Valuable Education, or SAVE, plan, but legal disputes limited its long-term future and it officially ended after a federal court order.

Kruger encourages borrowers to see whether they qualify for these programs, especially if they are between jobs for a while.

“Borrowers could also look into deferring their student loans beyond the grace period if they are expecting to get a high-paying job but have not yet started work by the end of the grace period,” she said.

3. Stay Away From New Debt

While Vanessa waits for licensure and employment, Kruger advises avoiding additional borrowing, particularly high-interest debt such as credit cards.

She also recommends creating a practical budget to cover current living costs and prepare for future student loan payments. At the same time, she suggests looking for ways to save money or bring in extra income, even if that means taking work outside a chosen career path for now.

“You may want to look for short-term ways to earn income outside of your career path or reduce expenses — such as living with roommates or family,” she said.

What To Do When Your Situation Changes

If Vanessa gets licensed and starts working in her field, she can revisit her repayment strategy and make adjustments.

“You can change your repayment plan by contacting your student loan servicer,” Kruger said. “StudentAid.gov has a helpful Loan Simulator tool that allows borrowers to evaluate how different repayment plans will impact their monthly payment, repayment period and total interest paid.”