Image of Mail student loans nyc

(Source: Karen via Flickr Creative Commons)

So you’ve graduated from college and now it’s time to start adulting. You need to:

  1.    Apply for jobs
  2.    Find an apartment
  3.    Get work clothes

The world is your oyster and it’s all going great. You think, “I’m killing it. Who says this was so hard?” Then the scary student loan bills start appearing.

That’s right. Immediately after you graduate from college, you get a six-month grace period before the student loans start coming. Opening that first bill is painful, and chances are, you’ll owe more than you’ll make in a year, even before you pay taxes.

While paying off student loans can seem like an insurmountable burden, it is a big part of this so-called “adulting.” A little over two years after graduating college, I’ve been able to pay off almost $40,000 in student loans. It was hard — and I had the advantage of being able to live at home — but even in as crazy expensive a place as NYC, I was able to pay off a lot of debt. You can, too, if you set a budget and live by it. Here are some tips and tricks to help you pay off student loan debt in NYC.

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Prioritize High-Interest Rates

Interest rates on student loans vary, so it’s important to note different rates when you get your bill in the mail. Some loan companies, such as Sallie Mae and Navient, will list your loans and show the interest rate beside them. Remember that it makes more sense to pay off a $5,000 loan with 9 percent interest before a $10,000 loan with 2 percent interest.

When you make a payment, your money is typically divided evenly to pay off a little of each loan. It works to your advantage, however, to pay off the loans with the highest interest rates first. It does take a little extra legwork to do this, since you have to call your loan provider and specify that you’d like to pay off one loan faster than another.

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Another option is paying bimonthly, which will help you get rid of your loans twice as quickly. Personally, I paid what I could each month until I had saved enough to pay off an entire loan. This way, after one full loan is paid off, each remaining loan gets a greater portion of my monthly payment.

Pro tip: When you start paying off loans, the majority of your money goes to paying interest, not principal, so you want to pay down the high-interest loans ASAP.

Maximize Your Tax Return

Yes, taxes are terrifying — especially filing them for the first time. But one perk of paying taxes as a recent college grad is that you can deduct up to $2,500 per year in student loan interest on your federal taxes. Boom! Thanks, IRS man!

Aim to pay off at least this amount (if not more) per year to maximize this deduction. If and when possible, try to pay more than the minimum amount on your loans per month. Although you’ll have extra cash in your pocket in the short term by not doing this, you’ll be saddled with a lot more interest in the long term.

Get a Side Hustle

Find a second job in your spare time and make some extra money. Pick up a job babysitting, housesitting, bartending, dog walking, freelance writing, Uber/Lyft driving — whatever. Remember, however, that working double time can be a double-edged sword. The more money you earn, the more taxes you’ll pay.

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If you decide that the extra work is worth the higher taxes and choose to do freelance or contract work, remember to pay or save estimated taxes throughout the year. Otherwise, you might find that you owe an unpleasant amount of money (or even a fine) to the IRS come April.

Pack Your Own Avocado Toast

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Trust me: it tastes better when it doesn’t cost $20. (Source: Buvette via Flickr Creative Commons)

I’ll admit it. Just like every other New York City millennial out there, I love myself a good avocado toast. Although avocado toast has lately been blamed for millennials’ soaring debt and inability to purchase real estate, it’s only part of the problem. Food costs in this city are astronomical across the board.

The average lunch in NYC runs $8-$15, which means that at five lunches a week, you are easily out $2,500 or more a year. Preparing your own food can cut costs down significantly, and the extra money can be used to cover a loan payment or two.

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Refinance Your Loans

Refinancing loans allows you to consolidate your loans at a lower interest rate. But if you can’t refinance to a lower interest rate, don’t refinance!

Even if you can refinance for a lower interest rate, it is not necessarily a smart option for everyone. If you are currently working in public service or plan to go into it, this option is likely not for you. The reason is simple: By refinancing your loans, you are turning your public loans into private loans, and as a result you will no longer be eligible for loan forgiveness.

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There are many caveats to loan forgiveness, and different rules and limitations depending on your field. But if you work in teaching, nursing, nonprofits, government (federal, state or local), Americorps or in the Peace Corps, look into loan forgiveness.

Undoubtedly, everyone will take a different path to student loan repayment. While it may seem challenging, remember that NYC has a lot to offer — so don’t let the student loan nightmare keep you from enjoying all that is available in the Big Apple.