Student Loan Advice: 10 Tips to Help Manage your Debt
There’s plenty of student loan advice out there, making it difficult to know which tips to follow. While everyone’s situation is different, certain strategies could help you pay off your debt more quickly or at the least cost.
Here are 10 ways to strategize repaying student loans, including in-school payments or refinancing for lower interest rates.
- 1. Understand your student loans
- 2. Know your grace period and consider in-school payments
- 3. Avoid borrowing more than you need
- 4. Explore your student loan repayment options
- 5. Sign up for automatic payments
- 6. Continue living like a student
- 7. Pursue jobs that could lead to loan forgiveness
- 8. Focus on complete debt payoff
- 9. Consider refinancing your student loans at lower rates
- 10. Don’t let your payments lapse
1. Understand your student loans
Getting organized is one of the first steps for a student or new grad facing student loan payments. It’s crucial to track down the details of your loans so you can create a timeline for tackling the debt.
Start by gathering the following info:
- Current balances. Also include how much you’re planning to borrow for future loans.
- Interest rates and terms. Make a note of whether your loans have fixed or variable rates and how long you have to pay them off.
- Issue dates. Knowing the disbursement dates on your student loans for the upcoming year can help you plan to ensure you have enough funds to cover the school year.
- Extra fees. Certain loans charge upfront fees, which are generally deducted from your loan’s disbursement.
- First payment date. See if you have a grace period or required to make payments immediately.
Once you have all the necessary data, you can use our student loan calculator to estimate your monthly payments.
The interest rate deserves special attention since it’s a part of the loan you can sometimes have a level of control over. For example, a student loan refinance (see below) or signing up for autopay (see below) can potentially lower your rate, saving money over the long run.
Where do I find my student loan details?
It’s easy to lose track of your loan servicers in the chaos of attending school. However, knowing how to find your student loan balances is vital for successfully paying off your debt.
- For federal student loans: Sign in to your studentaid.gov account to see your loan servicers, current balances, payment details and more.
- For private student loans: Most private lenders provide an online portal to view balances and make payments. If you can’t access it, try calling them directly. And if you’re unsure about who your lender is, check your credit report via AnnualCreditReport.com — all your debt will be listed there.
Most importantly, notify your loan servicers if you change addresses to ensure you don’t miss a statement. Alternatively, you can sign up for autopay to stay on top of your bills.
2. Know your grace period and consider in-school payments
Most student loans come with a grace period, usually meaning that you don’t have to pay anything while attending school at least half-time, and that you have until six months after you leave school to begin repayment.
But if your budget can manage small or interest-only payments as a student, you could significantly reduce your overall loan costs.
This is the case unless you have Direct subsidized federal loans, for which the government pays your accrued interest while in school and during the post-graduation grace period. However, for almost all other loans, including unsubsidized federal loans and most private student loans, interest will rack up during your studies and the grace period that follows. This can add thousands of dollars to your debt.
If your funds are limited, consider getting a part-time job or work-study position to help make some level of payment on your loan.
3. Avoid borrowing more than you need
If you yet haven’t taken out student loans, it’s advisable to proceed with caution. Many of the 48 million Americans who owe student loans in 2022 (carrying a collective $1.75 trillion) probably wish they could turn back time and take out less debt.
Remember, even if you’re offered a certain amount of student loans in your financial aid award letter, you’re not obligated to take the total amount.
Instead, estimate your cost of attendance and consider defraying that cost with a college job or side hustle. Additionally, you can ask friends and family to chip in with the Gift of College and other crowdfunding platforms.
Ultimately, you’ll be out of debt sooner by keeping borrowing to a minimum.
4. Explore your student loan repayment options
Another pro tip is to research your student loan repayment options. There isn’t a one-size-fits-all approach, however, as every student’s financial situation varies.
With federal loans, you have access to the standard 10-year plan, income-driven plans, extended repayment and others. This flexibility allows borrowers with limited income to lower their monthly payments.
And there’s more: The repayment plan you choose now doesn’t have to be locked in for the entire life of the loan. The Department of Education allows you to change repayment plans at any time with no extra fees or costs.
Private student loans don’t usually have as many options, although certain lenders offer deferment or forbearance if you run into financial hardship or go back to school. If you need to adjust your monthly payments, speak with your lender to explore what’s possible.
5. Sign up for automatic payments
Did you know that some financial institutions offer a discount on interest when you sign up to pay your loans automatically? Federal student loan servicers and private student loan lenders typically offer a 0.25% interest rate discount if you sign up for autopay, though some might offer more (or less).
Not only can autopay save on interest, but it could also help ensure you make timely payments. You can “set it and forget it” — your loan repayment runs on autopilot, so you won’t have to remember to pay your bills each month manually. It’s advised to do this for all your loans to make sure none fall through the cracks.
6. Continue living like a student
After graduating, it’s easy to start spending more money. For example, you might need professional clothing for interviews or furniture for your new place. It’s tempting, but do your best to avoid “lifestyle creep” during the first few years after graduation.
Even if you land a high-paying job right out of college, it’s worth continuing to live on your college student budget.
By sticking with a budget, you can repay your loans sooner and start enjoying that extra money without the uncomfortable feeling of debt breathing down your neck.
7. Pursue jobs that could lead to loan forgiveness
The Public Service Loan Forgiveness program can wipe away your college debt after working 10 years in a nonprofit, government agency or other qualifying workplaces.
Other professions — such as teacher, lawyer and doctor — can sometimes qualify for loan forgiveness or repayment assistance.
Furthermore, you can seek out jobs offering loan repayment assistance plans as part of their employee benefits package. Even if the salary is a little less than ideal, these jobs might still be worth pursuing if the student loan repayment assistance is especially generous.
8. Focus on complete debt payoff
You might feel overwhelmed at how much you have to pay back. This can be discouraging for anyone starting in the workforce and still getting a footing in the world.
Two popular strategies for student loan repayment are the debt snowball and debt avalanche methods. Both involve paying a little extra on your loans each month, but they differ in terms of which loans to target first:
- Debt snowball approach: Focus on closing out the loan with the smallest balance first, directing any extra payments to that debt. The sooner one of your loans drops off the list, the more motivation you’ll likely feel to keep going on to the next.
- Debt avalanche method: This approach targets the loan with the highest interest rate first, thus reducing your overall paid interest. This should save you money, even if it doesn’t always come with the same morale boost as the snowball method.
Consider experimenting with both debt repayment strategies to see which one is more effective for you.
And remember, making extra payments is key to seeing rapid progress on your repayment — specifically if you instruct the servicer or lender to designate the extra money as principal-only payments.
9. Consider refinancing your student loans at lower rates
Once you have good credit and steady income — or can apply with a cosigner who does — you might qualify for student loan refinancing.
Through refinancing, you can restructure your debt, adjust your terms (shortening a loan’s term can help you pay off your debt faster), and potentially score a lower interest rate (saving money over the life of the loan).
But the benefits of refinancing aren’t for everyone, especially if you rely on federal student loan protections. For example, refinancing federal loans will cause you to permanently lose access to the various federal aid programs, such as income-driven repayment plans and Public Service Loan Forgiveness.
Consider the pros and cons of refinancing before moving ahead. If you don’t need those federal programs, refinancing your student loans could be a savvy way to adjust your monthly payments and save money on interest.
10. Don’t let your payments lapse
The final piece of student loan debt advice may seem obvious, but it’s an easy trap to fall into: Don’t default on your student loans if you can avoid it. If you’re struggling to make payments, contact your loan servicer immediately.
You might be able to pause payments temporarily, so your loans don’t become delinquent or go into default. Defaulting on debt can destroy your credit score and lead to wage garnishment in the case of federal loans.
If you’re experiencing financial hardship, consider financial advising through your school’s financial aid office. They might be able to help you receive more federal student aid.
Even though getting on top of your student loans might take time and effort, utilizing these 10 tips of student loan advice could hopefully enable you to pay off your student loans faster.