Solid strategies for repaying those student loans. Don't hesitate, just read and take action!

Even the most ambitious college grad might have some trouble getting excited about this one: repaying student loans. And with the average graduate leaving college with $27,204 in student loan debt, that day is sure to come for many a young professional.

So yeah, maybe you’d rather poke your eye out than think about repaying your loans. But if you don’t spend some time figuring out your best strategy, you might be making higher repayments than absolutely necessary. That’s right. You might be able to take home more bucks each month.

How’s that possible? Check out these tips on how to take your student loans from overwhelming to under control:

1. Don’t freak out, advises The Project on Student Debt.  If those loans are a huge pain because of unemployment, health problems or other unexpected financial issues, you have options to delay payments until you get back on your feet. A deferment or forbearance might be right for you, but consult your lender and make sure you understand the terms of postponing your payments.

Keep in mind that interest accrues on all types of loans during forbearances, and on some types of loans during deferment, which increases your total debt. If you can afford it, consider making interest-only payments.

2. Stay organized. If you have a mess of private and federal student loans, it can be difficult to keep everything straight. The government’s National Student Loan Data System tracks all your federal student loans, which makes it just a little bit easier to stay on top of who you owe and how much.

3. See if you qualify for debt forgiveness. Who said there are no free lunches?  Depending on your field, you could qualify to have part of all of your federal student loans cancelled. If you do volunteer work, you could also qualify for loan forgiveness. See FinAid’s student loan forgiveness section for details.

4. Consolidate, but with caution. If you’re struggling to make your monthly payments, consolidating your loans can make your life easier by giving you a single, lower monthly payment and more repayment options, but there are caveats. This Forbes article breaks down the pros and the cons.

5. Tackle private student loans first. Private student loans almost always have higher interest rates and less repayment flexibility, so it’s best to address those loans first, says Miranda Marquit, a personal finance writer for Yielding Wealth. “We really don’t want the interest capitalized (meaning the interest accrued is added to the principal and then more interest is paid on the interest),” Marquit writes.

6. Pick up the phone. If you’re having trouble keeping your head above water with student loans, just communicating with your lender can  cut hundreds of dollars  from your monthly payments. Keep in mind when switching payment plans that the length of the plan could mean more interest costs over time.

7. Set up automatic payments. It’s easy to get caught up in the day-to-day rush, but missing a payment can result in killer late fees. It can also prevent you from getting a lower interest rate — many loan services will take off a quarter of a percent after a designated number of on-time payments.

Check with your lender or bank to see if they offer automated payment programs.

8. Overpay if you can. Times are tough financially for everyone, but if you can scrape together a little extra money and put it toward you loans, that little bit each month can add up to a lot over the long term. “It’s amazing what even an extra $50 per month can do for debt eradication,” according to a post on My Dollar Plan. “[It] saves you $3,000 on consolidated loans and about $1700 on non-consolidated loans.”

9. Check out whether you qualify for income-based repayment (IBR). If your federal student loan debt is high relative to your income, income-based repayment could help alleviate the pressure of repayment. If your total student loan payments for the year are higher than 15 percent of your annual income, you can have your loan spread out further and your monthly payments lowered.

Another perk? If your IBR payment is less than the monthly interest that accrues on the loan, the government will pay your unpaid interest for up to three years, according to the Student Loan Network. If you are still making IBR payments after 25 years, your debt is forgiven.

10. Don’t let loans prevent you from pursuing your entrepreneurial path! There are programs specifically designed for entrepreneurs and the Small Business Administration can also help set you up with a plan to help launch a business while keeping current on your student loan payments.

Meg Handley is a writer and online journalist who covers a wide range of money and business topics including economics, investing, and real estate. She lives in Washington, D.C. and tweets as @mmhandley.


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  3. Susan Choi

    These are great tips guys!

  4. Eva Roethler

    I usually get excited when I see articles about student loans and how to manage them, however, they almost always only apply to federal loans. I don’t think people realize that private loans are an entirely different beast. None of the tips that you have provided are applicable to private loans- I funded my education with CitiBank Student Loans, and there is a number on their site to “Call if you are having difficulty making your monthly payments.” I have called that number three times looking for options to make my payments more manageable… such as consolidating the four loans I have with them into one, extending my repayment period, or seeing if there is a graduated repayment plan… no such luck. Calling that number is useless, because there are no options at all.

    Which is just one of the many reasons I have been participating in protests against these big banks- they pleaded for help in 2009 and got billions in taxpayer dollars, but lack compassion for the millions of students who are drowning in debt and refuse to offer livable repayment options. I stay on top of my payments, and work ~60 hours a week to make sure I can pay my loans. I consider myself lucky to be employed and love my jobs… but I wish that, one day, I could find an article about managing private student loans to make my life just a little bit easier. Hopefully private student loan lenders will change their apathetic mentalities, soon.

    This is a well written article, but I just wish it applied to me!

    • Lynnie

      argh…This sucks. I have no student loan, no any sort of debt in that sense. Daddy took care of all. But I have no job either, not to mention one that I love. I’d rather switch position with you. > <"

    • Janell Pratt

      I have the same exact issue as you do. I cant even believe that another person is going through the same thing a me. calling the number is absolutely pointless. I too work 60+ hours a week and rarely have a day off so i can afford my private citi bank loan. It is miserable…i hope that one day they will see how much we are all trying but could use a little help with lengthening the term. good luck

  5. Critacclaim

    This is a great article and plenty food for thought. I am just beginning to pull my student loans out of default and consolidate them under the IBC repayment plan. I caught them trying to resell my loan after I paid in down from 18k+ back to 12k+…I nerve of them! However, I did not know there were forgiveness organizations in existance. I bookmarked this page and will do indept research on all these programs they mentioned in this article to see if I qualify for any. Thanks guy/gals for these tips. Keep them comin’.

  6. Jeff Thomas

    Thanks! These come in handy soon.

  7. Anonymous

    Going through the post I have clearly realized why people of all walks of life have taken the web as the best source of information and knowledge. Really it’s a ver helpful piece of writing. Thanks!

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  8. Liz StudentLoans

    Lately I have decided to consolidate my student loan because that was advised by my friend may I know if I have made the right choice? I consolidate my loan without even knowing what will happen next.

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  12. Sudarto

    Your tips for those who get difficulty to pay off student debt is a very good. Of course, we must start from the most likely.
    Most likely to be practiced and most likely to accelerate repayment. In fact, most likely to escape from the difficulties in debt.
    I am very happy to choose the fastest way to pay off debt. Although by tightening spending, for example. I limit spending unimportant or can be postponed.
    For me, the repayment of debt must be a priority of life. Let us live in peace without the burden of debt.

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