Paying off Student Debt Tips

June 27, 20220

Paying off student debt tips


For many people, student debt is the first major financial challenge they face. And it’s no surprise—payments can be a big monthly strain on your budget. But there are lots of different strategies to make repayment easier, and if you know what you’re doing, paying off your student loans doesn’t have to be difficult. Here are some things you should consider as you look for a way forward:

Find out what type of student loan you have(s)

It’s important to know what type of student loan you have before making a payment plan because it will determine which options are available to you.

  • Direct subsidized loans are given directly from the government or a school. They don’t accrue interest while they’re in deferment or forbearance, but they do add up over time.
  • Direct unsubsidized loans are given directly from the government or school and don’t accrue interest while in deferment or forbearance—they also add up over time.
  • Federal Perkins Loans are made by schools themselves (not by banks), so these aren’t technically “student” loans; however, many schools offer both types of federal aid programs for students: direct subsidized/unsubsidized and Perkins Loans.* Guaranteed Student Loans are issued by private lenders and backed by guarantees from the U.S Department of Education.* Private Student Loans typically come with higher interest rates than other types of college financing options like scholarships and grants.* Parent PLUS Loans help parents pay for their children’s college tuition at any eligible institution that accepts applications for federal financial aid (FFA).

Create a budget and stick to it

Set a budget. Before you can start paying down your debt, you have to know how much money is coming in and going out of your bank account. You may need to create a spreadsheet or use an app like Mint or Personal Capital to figure this out. You can also use a service like Credit Karma to get complete insights on everything related to your credit score and finances.

Once you have everything organized, look at the difference between what goes into your savings account and what comes out of it (you may be surprised). If there’s not enough cash left over at the end of each month after paying bills, then it might be time for some financial housekeeping: consolidate accounts; negotiate better rates; find low-fee investment options that fit with your risk tolerance; etcetera.”

Consider refinancing your student loans

Refinancing your student loans is a good option if you’re looking to lower your interest rate, pay less in total each month, or a combination of the two.

It’s important to note that refinancing doesn’t absolve you of any debt—it simply unlocks different repayment options. You can still default on your loans if you’re unable to keep up with them, and unsecured debts (like credit cards) will still be owed in full.

When considering whether or not to refinance your student loan, it helps to know what types of repayment plans are available:

Explore student loan forgiveness options

If you’re considering paying off your student loans, it’s important to understand all the options for forgiveness. Some programs are only for certain professions, such as doctors and teachers; some have time limits, and others have income limits.

Some examples of student loan forgiveness include:

  • Public Service Loan Forgiveness: This program forgives federal debt after 10 years of qualifying service in a public service profession.
  • Teacher Loan Forgiveness: If you teach at a low-income school or high-need subject area, up to $5k/year in Perkins Loans can be forgiven each year for five years (up to $17k total). This is also available for special education teachers who work at schools with large populations of students with disabilities.

Make extra payments when possible

Make extra payments when you can. If you have extra cash and want to pay off your student loans quickly, make an extra payment on the loan with the highest interest rate. Making an extra payment will reduce the monthly payment and allow you to pay off the loan sooner.

If you don’t have any cash at all—that’s ok too! There will still be some benefits from paying more than what is due each month:

  • You reduce how much interest accrues on your loans
  • Your credit report will show that all of your accounts are being paid in full and on time, which is a good thing for lenders when considering whether or not they should give someone with borrowed money their business again (this may help them get lower interest rates)

Consider consolidating your loans to make payments easier

Consolidating is a way to combine multiple student loans into one. You may want to consider consolidating if you have several loans with different interest rates, or if you have loans from multiple lenders, or if your loans are from different loan programs.

Consolidation also has some drawbacks. For example, it can delay the repayment period of some types of federal student loans and increase the amount that is due each month. In addition, not all private lenders allow consolidation of their loans through this process; if you want to consolidate a private loan into an income-driven repayment plan (IDR), then check with your lender first before choosing this option.

Not all student debt is the same. Look into different ways to pay it off.

When it comes to paying off your student debt, there are a lot of options. You could consolidate your loans and refinance them at a lower interest rate. Or you could sign up for one of the many repayment plans that help you pay off your loans faster. But before you can start making those decisions, it’s important to understand which type of student loan debt you have and how that affects the options available to you.

In general, there are two major types of student loan debt: federal and private/alternative financing (non-federal). Federal student loans include Stafford, Perkins, PLUS and Consolidation loans; these types of loans make up about 90% of all outstanding balances in the U.S., according to Student Loan Hero’s 2018 State Of Student Loans report (stateofstudentloans2018). Private or alternative financing includes private student loans from banks or other providers as well as venture capital funds; this category accounts for less than 10% overall but has grown significantly since 2008 due largely in part due to increased enrollment among higher education institutions such as colleges & universities during this period time frame based on data culled by National Center For Education Statistics (nces)


There’s no “quick fix” to paying off student debt. It may take years of hard work and dedication, but planning ahead will help you more quickly reach a solid financial situation. Use the above tips to get a good idea of how you can best pay your debt off, and always consult with a professional if you have questions about these decisions.