Money Advice for Those Graduating During the Pandemic

By Ellevest Team

Real talk: It might be the worst possible time in living history to graduate from college. The coronavirus pandemic has hammered the job market and forced companies to freeze hiring or reduce hours and salaries. This kind of downturn can make it hard to get off on the right foot with your money, but here’s my best advice to help.

A photo of a young woman working on a laptop.

What you need to know about student loans

If you’re graduating with student loans, you might be wondering how to start tackling that debt. The good news is that you probably have some time until your payments will start.

For most federal student loans, the government gives you a few months — presumably so you can find a job and start earning income — between the time you graduate and when you have to start paying your loans back. This is called a “grace period” and typically lasts six months. Some private loan providers offer a grace period, too, but call them or look online to make sure and see how long it lasts. (If you don’t have a grace period, it’s still worth calling your loan provider. They might be offering special relief options during this pandemic.)

So for May grads, a six-month grace period will take you through November. If you graduated this past December, the grace period would end in June — but you aren’t necessarily out of luck then. The CARES Act placed everyone with qualifying federal loans into forbearance until September 30, 2020.

If you have federal student loans and you find yourself still struggling to make ends meet once your grace period or forbearance ends this fall, I recommend choosing an income-based repayment plan — if your income is low enough, your payments could remain at $0.

If you have no (or very little) income right now

Look for ways you might be able to get help

Unfortunately, if you just graduated, you probably won’t be eligible for unemployment benefits. That’s because you have to have earned a minimum amount of income and worked for a certain period of time before you can qualify for unemployment. That being said, if you worked while you were in school, you might be eligible, and you should check to see. Your state will be able to tell you either way.

You might also be able to get other kinds of assistance, like help buying groceries or paying for rent or utilities. Some of this help is from the federal government and some of it is more local. Check in with your local community action agency (CAA) — they can help you figure out what you might be eligible for and apply for it. Also look at Need Help Paying Bills and Find Help. The CARES Act gave colleges and universities the funding to give out grants to help reimburse students for expenses they had to pay thanks to classes going remote mid-semester. Check with your school to see if you’re eligible to apply.

We also put together this list of resources for those who are struggling financially, some of which may help.

Look for ways to earn income ASAP

Think outside the box in terms of how you might earn income. We put together this list of a few ideas for how you might be able to earn money sooner rather than later. We also recommend job searching widely to help you find a role as quickly as you can — here’s some advice specifically for new grads from Ellevest’s lead career coach, Stephenie Girard, to help you do that.

Cut back on spending as much as you can

My first piece of advice on expenses is to keep your fixed costs (things you have to pay the same price for each month, like rent and your car payment) as low as possible.

Often, the biggest chunk of people’s budget is housing. If you’re looking for a new place to live, I urge you to try to keep your rent as low as you can — that will help keep your costs down right away, but it will also give you more wiggle room and flexibility in your budget once you start earning more. That’s never a bad thing. If you’re planning on moving, finding a roommate — or more than one — might help. (Although of course, that might be hard if you have to move during the pandemic.)

If living at your parents’ house is a healthy and available option for you, it could be a good idea right now. I know it’s probably not ideal, and you might perceive a stigma around moving back home. But there’s zero shame in doing what you need to do to get through a global health crisis and recession, especially when there are millions of other people going through the same thing.

Other than that, you might need to make some tough decisions about what stays and goes in your budget for a little while. You may have to pause subscriptions, plan your meals more strategically, and cut back on non-essentials. But keep in mind that it doesn’t have to be forever — it just has to get you through this crisis.

Use credit strategically

If you can help it, we don’t recommend using credit (aka debt aka borrowing money) — especially when you’re just starting out and are looking at how you’ll repay your student loans. But sometimes you truly can’t help it. If you’re having trouble paying all your bills right now, you might have to consider using forms of debt like credit cards or personal loans.

The important thing about using debt to make ends meet is that you want to get the lowest interest rate possible. That’s because interest can cost you a lot of money over time, and the higher the interest rate, the steeper that bill will get.

Start by taking a look at all the forms of credit that you have available. If you already have a credit card, and you haven’t hit your credit limit, your existing card might be one option. If not, see if you’ve gotten any offers in the mail recently for new cards, or for personal loans. It might be tricky to get approved since you’re so new to credit, and you might have to shop around a bit — try looking for loans or cards specifically geared toward recent grads. Those often come with high interest rates and / or low credit limits, but they could also be an option. Then, once you have a list of your credit sources, use the one with the lowest interest rate.

If you do have a job

If you’re going to be working after graduation and earning enough to pay the bills, you’re in a fortunate position. There are a few steps we recommend taking to set yourself up well in the future, in this order, as you’re able:

  1. Make a spending plan, because it’s the best way to make sure that you are acting in your future self’s best interests. Here’s some advice on using your personal values to do that. (Given the current times, I’d urge you to keep your fixed costs low. That way, your budget will be a lot more flexible if something happens to your income, and you’ll be able to set aside more of your money for the rest of the things on this list.)

  2. Get your company’s full 401(k) match, if you have one. That’s free money. That being said, if you’re worried that your job might be at risk right now, you might choose to skip this step for a little while. In that case, come back to this step in a few months when you (hopefully) have a better idea about your job stability.

  3. Pay off high-interest debt, aka any debt with an interest rate of more than 10%, like credit cards. Use any wiggle room in your budget to knock it out ASAP.

  4. Save for emergencies. We recommend aiming to have three to six months’ worth of your take-home pay in a safe, easy-to-access place (like a savings account). This jobs crisis has highlighted exactly why emergency funds are so important.

  5. Pay off debt with interest rates between 5 and 10%. That’s the last of the debt that requires special prioritization. For any debt with interest rates less than 5%, we recommend just paying the minimums until they’re gone.

  6. Invest for retirement and your other goals.

And finally: Congratulations on achieving such a huge life milestone. Whatever happens in the short term with the economy, you’ve just done something amazing to set yourself up for great things in the long term. Don’t forget, as you cope with this (hopefully short-term) crisis, to be proud of yourself.


© 2020 Ellevest, Inc. All Rights Reserved.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.

Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.

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