10 Things to Do in Your Last Semester of College
Note that the situation for student loans and other financial aid has changed due to the impact of the coronavirus outbreak and relief efforts from the government, student loan lenders and others. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
* * *
As you start your last semester of college you’re probably thinking about the job search, passing your exams and, of course, graduation. But just beyond your graduation date, a multitude of new, adult responsibilities looms.
Don’t panic, the next stage of life after your degree can be truly rewarding, but you’ll be far more prepared for it if you can take advantage of your last semester in college to make some proactive financial decisions.
Making smart financial planning and money moves now can go a long way in building a secure foundation for the rest of your life. To get ready for the real world, here’s what you should do with your finances in your final semester of college:
1. Calculate your student loan payments 2. Learn about student loan repayment options 3. Pay off non-educational debts 4. Thank your professors or administrators 5. Project post-college expenses 6. Decide on your next steps 7. Participate in your favorite college traditions one last time 8. Build a savings fund 9. Find new health insurance 10. Start building credit
1. Calculate your student loan payments
In your last semester of college, take advantage of on-campus resources that can prepare you to tackle student loans. Most student loans have a six-month grace period from your graduation date, so you likely won’t have to make payments right away, but it’s important to know how much your payments will be and how you’ll pay them in advance so that you’re not caught off guard when the time comes. This is especially important if you have multiple loans with different repayment details.
Determine what your student loan balance is, and then enter your information into the Student Loan Hero payment calculator. You’ll be able to see how that translates into a monthly payment. Our data show the average monthly payment for student loans falls in the $200-$299 range.
2. Learn about student loan repayment options
One of the most important things to do in your last semester of college is start learning how to repay your student loans. You might have difficulty keeping up with a standard payment plan, especially in the early stages of your career when you’re trying to gain your footing in the job market. Alternate student loan repayment plans can help. Get informed now on how to enroll in these programs, their benefits and their drawbacks.
For example, you could consider an income-driven repayment (IDR) plan. There are four versions of IDR but they commonly work by setting your monthly payments at a fraction of your discretionary income, which is determined as a percentage of your total income.
You might also consider refinancing your student loans. If you qualify for a lower interest rate now than you did when you originally received your loans, you could save money by refinancing your loans. You’d get a new loan for the total amount of your current outstanding loans, then use these funds to repay your old loans.
Remember, however, if you do choose to refinance your federal student loans you will lose any eligibility for future IDR plans or loan forgiveness.
3. Pay off non-educational debts
Along with planning your student loan repayment, you need to tackle other debts — especially high-interest debts like credit cards or auto loans. Since you’re about to have student loan payments added to your monthly expenses, it’s a good idea to reduce any current debt obligations now so that you can free up funds.
If you have a lot of high-interest debt it can feel overwhelming, but there’s definitely a way out. You’ll have to decide between the debt avalanche versus debt snowball method. With the debt avalanche method, you direct extra payments to your highest interest debt first, while continuing to make on-time monthly payments on all your other debts. With the debt snowball method, you build momentum by successfully paying off your smallest debts, while directing progressively larger sums to your more substantial debt.
4. Thank your professors or administrators
You might be looking forward to the day when you never have to step foot in a classroom again, but the relationships you’ve built with professors and school administrators over your college years could impact you for years into the future.
Since these people are familiar with your work, they could be instrumental in helping you land your first job or by providing strong references letters. Not just that, should you decide to pursue further education in the future, they could give you insight into what programs might be best for you, and could help when it comes time for a reference letter to be included in your application or for future scholarships.
Set aside time to write sincere thank you notes — whether handwritten or an email — and commit to nurturing the relationships you’ve started in your college years.
5. Project post-college expenses
The last semester of college is also when you should look at the living expenses you can expect to face after college. It’s likely your living expenses will increase after graduation, especially if your parents are currently helping you with expenses or if you went to college in a smaller town but are planning to move to a bigger city for work.
If you’ve made it through college without creating a budget, getting into the habit of monitoring your finances now can help make the transition into your early career easier. You could consider the popular 50/30/20 rule of budgeting that helps you distribute your finances in categories of needs, wants and savings.
Figure out how much you should budget for expenses like health and car insurance, rent, groceries, utility bills, cell phone, internet service and more. Don’t forget to add your student loan payments into your budget as well. If you’ve had help from parents covering these expenses, start a discussion on how those costs will be covered post-graduation.
6. Decide on your next steps
Many people decide to head straight into the workforce after their undergraduate degrees, but others like to take a gap year to travel or continue on to graduate school. If you haven’t already decided what’s next for you, grappling with this question is important to do in your final semester of college.
If you intend to go to grad school, for example, you’ll likely need to take additional exams such as a GMAT or GRE, or other program-specific tests. You’ll need to make sure you take these exams in time to get your results back to use on grad school applications, so reviewing what test scores you need and when the tests are administered in your area is very important.
Similarly, if you’re hoping to get a job immediately after college, starting your job search before you graduate can help you land something sooner. You’ll want to revamp your resume and brush up on your interviewing skills. Then, start sending your resume out, participating in job fairs and networking with alumni to try to land that first job.
7. Participate in your favorite college traditions one last time
You probably have a lot of things to do in your last semester of college that involve plain old hard work, but don’t forget to enjoy this time in your life as well. Is there a meal you love to eat on campus? A varsity team that you cheered for at every game? Do you have a favorite local bar? In the midst of all the graduation advice and work you have to do to actually pass your classes, don’t forget to enjoy these intangible elements of your college experience.
Dealing with graduation and your upcoming student debt can be stressful. Survey results show that debt is the top money stressor for millennials. So, make sure to take time for yourself and don’t feel guilty about it. Honoring your emotions during this busy time period can help you start your next journey off with excitement rather than feeling prematurely worn out.
8. Build a savings fund
Even though saving money in college might sound difficult, it’s important to do whatever you can to put aside some cash. You might not find a full-time job right away and need to rely on your savings for basics like groceries or transportation. Or you could need cash to cover upfront costs like a deposit on an apartment, or moving to a new city.
You might think that it’s impossible to build a savings fund when you are paying student loans or have current college expenses, but even putting aside a small amount each month can help prepare you for the future. Try to limit your costs now and save as much as possible before graduation. The more you have saved, the more freedom and flexibility you’ll have to make choices based on your career and life goals — and not your wallet. Shop around for a high-interest savings account with no fees so you have easy access to your funds whenever you need them.
9. Find new health insurance
If you opted for a health insurance plan through your college, this coverage will likely end along with your last semester in college.
See if you are still eligible to be covered under your parent’s plan. If that’s not an option, you’ll need to budget for your own health insurance, unless you find a job directly after graduating that provides it. In that case, your employer health insurance forms will be some of the most important new job paperwork you fill out when you start, so make sure to follow up with your company that you’ve done so correctly.
If you’re not familiar with health insurance, this could seem somewhat confusing at first — there are a few specific terms related to health insurance that you might need to learn:
Premium: What you will pay each month to your insurer. A higher premium could mean you have a lower deductible or no copay. Deductible: The amount you will have to pay out of pocket before your health insurance covers the rest. Your deductible could vary depending on services. If you are enrolled in a high-deductible plan you could opt for a Health Savings Account (HSA), which is a tax-advantaged savings account that allows you to make qualified health-related withdrawals. Copay: The amount of the cost of service or medication you will share with your insurer.
Since health insurance can get confusing, it’s smart to sit down with a health insurance broker or someone trusted who can walk you through all of your options. If you get a job right out of college, your company’s HR department might also be able to help answer your questions about how health insurance works.
10. Start building credit
A credit score can be crucial when it comes to renting an apartment, purchasing a vehicle and refinancing your student loans. If you have bad credit, or no credit, your last semester in college is the perfect time to begin building your credit score.
First, get a copy of your credit report to know what score you’re starting at and to confirm all of your information on file is correct. You can request a free copy of your credit report online from the three credit reporting agencies at AnnualCreditReport.com. Typically, you can get one free report from each agency a year, although the COVID-19 pandemic in 2020 prompted the agencies to offer free reports weekly for a limited time.
After you know what your credit score is, you can look at ways to build credit. You can do this by applying for a secured credit card or by getting your rent payments to count toward your credit score.
You’ve worked your tail off getting through college. Putting your degree to use and making your student loans worth it will require smart financial planning — starting now. Use your last semester of college to set yourself up for lasting financial success.
Elyssa Kirkham contributed to this report.
The post 10 Things to Do in Your Last Semester of College appeared first on Student Loan Hero.
