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How to Pay Off Student Debt

Alanna Ritchie



Graduation comes with a huge responsibility for many: Handling those student loans that made education possible.

Around one in five households carry student debt, according to the Pew Research Center, and it’s up to you to start taking a portion of your shiny new salary to begin paying it off.

To assist you with this overwhelming process of how to pay off debt, here is a guide to tracking your loan information, developing good habits and speeding up your repayment time.

Put It In Writing

Pull out one of the spiral notebooks you used to for school and dedicate it to loan and budgeting information. Use the same meticulous study habits that helped you earn your degree to tackle your crash course in student loan repayment. Just like when you were in school — pay attention, take notes, do online research and stay committed.

While you won’t receive a class grade for this effort, you will eventually drop your student loan balance to zero, experience debt-free existence and manage your credit score.

Your notebook should include this data for each individual loan:

  • Lender name, phone number and extension, if you are communicating with one representative
  • Type of loan
  • Interest rates on loans
  • Total amount owed
  • Date when the grace period ends (usually six months after graduation or when attendance drops below half-time)
  • Calendar of scheduled payments

If you’ve misplaced your mail and are having difficulty keeping track of how many loans you have, go online to the National Student Loan Data System (NSLDS) where all your federal loans are listed. You will need the PIN number you received for your Free Application for Federal Student Aid to get access to your individual information.

If you have loans that are not federal — from banks, credit unions or other private lenders — these will not be listed on the NSLDS website and you will have to dig through the paperwork you were sent once your loans were approved.

Make Contact

Take a deep breath and reach out to your loan servicers. Handling debt means fessing up and opening the lines of communication. Make sure they have updated information including your email, phone number and home address, as you don’t want to miss important phone calls or bills that arrive in the mail.

When you contact lenders, find out how much you owe for each loan and get the first monthly payments in the mail. If you have multiple loans requiring high payments, find out if there are alternative repayment plans.

Consolidating government loans, which entails taking out one large loan to cover smaller loans, offers you multiple repayment options. Some of these options take your income into consideration and increase the repayment period, so that you make lower, affordable payments.

Consider all options before skipping payments.

Stick to the Plan

Once you know the dates and amounts you owe every month, commit to consistently making minimum payments. No skipping payments. No making payments late. Meeting these basic requirements is imperative to the long-term success of paying off loans.

One way to ensure that you make these payments is enrolling in automatic bill payments, which deducts the amount you owe without any effort on your part. Certain loan servicers will offer discounts once you enroll in their programs. For example Direct Loans (which are popular federal loans) provide an option for autopay that reduces your interest rate by a quarter percentage point during all periods where payments are made with the program.

Because loan payments may not be a typical part of the budget you’ve been living with, it’s important to keep track of your spending to make sure you don’t overdraft your accounts. A useful way of keeping of with your income and monthly expenditures is an online budgeting tool or smartphone application. These resources can save you from added fees or ugly surprises like forgotten payments.

Go Above and Beyond

Getting into a habit of making monthly payments is a huge step. If you’ve gotten this far, congratulations! You are ready to pay more than you owe each month. While lenders will accept your minimum payment without penalizing you with fees or increasing interest rates, the longer you take to pay off your loans, the more you will end up paying in interest.

Get ahead of the game by knocking some bigger chunks off your loan total. There are two major ways you can approach this task: Making a lifestyle change or increasing your income.

If you choose a lifestyle change, your goal will be to decrease your monthly expenses and increase the contribution to your loan payments. Try to reduce expenses by at least $20 a month. This will work differently for every person.

You could cancel your gym membership, skip the regular mani-pedis, or stay in and cook dinner at home over the weekends. Think creatively and take a disciplined approach.

Increasing your income can be accomplished by working more hours, requesting a raise, getting a part-time job for the weekends, or selling items you no longer use.

While a lifestyle change can impact regular payments, use extra income to pay off lump sums of your debt.

Over time, the energy you put toward controlling your finances will enable you to reduce and, eventually, eradicate your debt. The faster you erase these debts, the sooner you can put your money toward the next major goal, whether it’s an overseas vacation, a brand new vehicle or your own home.

Alanna Ritchie is a content writer for Debt.org, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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