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Goodbye study sessions, dorm food and lecture halls. Real life awaits.
For Jessica Granofsky, 23, however, that means moving back home.
Granofsky graduated from college last year and now works full time as a communications coordinator in the Toronto office of a San Francisco-based start-up. Although she says she earns a good salary and even makes more than many of her friends, she also owes $40,000 Canadian (about US$30,300) in student debt.
"It influences every decision I make," she said.
Those armed with a newly minted college diploma will enter a U.S. job market with unemployment near the lowest level in 50 years and job prospects up significantly from just last year.
Starting salaries are also higher. In 2018, college grads earned an overall average of $51,022, according to a survey by the National Association of Colleges and Employers.
And yet, 7 in 10 college seniors graduate with debt, owing around $30,000 per borrower, according to data from the Institute for College Access & Success. Overall student debt stands at more than $1.5 trillion, according to the Federal Reserve. Americans are now more burdened by college loans than they are by credit card or auto debt.
Those hefty student loan bills from school, which are at an all-time high, have put a severe strain on most recent graduates' financial circumstances. A whopping 87% of millennials said they'd been broke in the past or were currently broke, according to a separate survey by CreditLoan.
Abril Hunt, outreach manager at Educational Credit Management Corp., or ECMC, a nonprofit dedicated to helping student borrowers, offers the following tips on the road to financial independence for those just starting out and facing student loan payments, in addition to other expenses:
For starters, don't "put the cart before the horse," Hunt said. "Your income determines your lifestyle, so figure out all your expenses and expected take-home pay," she added, if you have a job after graduation.
"Look at how much money you'll make and adjust your lifestyle accordingly," she said.
For example, if you're earning $32,000 a year, that leaves $2,238 in take-home pay each month after taxes, according to Hunt's hypothetical. A good rule of thumb is to spend no more than 30% of income on housing, Hunt said. She also advises saving for retirement as well as building an emergency fund.
"If you don't think about retirement, you'll be scrambling later on," Hunt said. From there, you can determine how much you can afford in rent or how often you can eat out. See her budget breakdown for that $2,238 a month below:
"Be practical," Hunt said. You'll want a revenue stream coming in even while you are hunting for the perfect position, so take something short term to pay the bills while you are looking for your dream job, she said.
To that end, regardless of your age or lack of experience, when it comes to landing a sought-after gig in today's market, networking is still your best bet, experts say.
In the meantime, take steps to cut costs, such as canceling a gym membership you don't use, scaling back food and clothing purchases to the bare necessities and opting for free entertainment until your income picks up.
The good news for graduates is that, for federal loans, which make up the bulk of student debt, there is generally a six-month grace period after graduation that gives borrowers time to get on their feet before they have to start repaying their college debt.
However, even though payment is not required during the grace period, interest continues to accrue, so consider starting your payments as soon as you can, Hunt said.
By default, you are likely in a 10-year standard repayment plan but there are other options, including pay-as-you-earn or income-based repayment.
"Be aware of the many repayment options, and understand you can switch between plans if necessary," Hunt said.
If your budget feels stretched too thin, look into those income-based repayment programs, which allow you to pay a percentage of your income rather than a flat rate, as long as you are under a certain income threshold.
If you are feeling flush from monetary gifts at graduation or a starting bonus, consider getting a head start on the first few payments.
Another way to ease some of the burden is to send in a little more than the minimum payment each month toward principal of the loan — by even $25 — to pay off your loan faster and spend less in interest, Hunt said.
Just make sure extra payments go toward unsubsidized loans first, then toward loans with the highest interest rate.
You should also specify that those extra funds get applied to the principal of the loan and not to future interest payments.