Article | 3:03 min read

How to Pay Off Your Student Loans Right

Life Events

When it comes to student loans, the amount of money owed can be overwhelming and paying it down is no small feat. When tackling any kind of debt, there are good and bad ways to begin your journey to financial freedom.

Academic advisor talking with college student

Getting Started

The first thing any new degree-holder should do when beginning to pay off their student loans is find out how much he or she actually owes. After several years of borrowing money, it might be tough to know for sure how much you actually borrowed. To find out how much you owe in federal loans, your best option would be to sign into your Federal Student Aid website to view your loan balance. Keep in mind though, that private loans will not be shown on here and you will still need to contact the lender of the private loan to find the balance.

Once you know how much you owe, you will be able to form a debt repayment plan. There are several different ways to pay back federal loans. The most common are:

  • Standard Repayment: with this plan, you will make equal payments every month for 10 years. Since this repayment plan is one of the fastest, you will pay less interest over time.
  • Income-Driven Repayment: With this plan your repayment term will either be 20 or 25 years. You will pays 10%-20% of your income each month and at the end of the term you can receive income-driven loan forgiveness.
    Graduated Repayment: With this plan, you will finish your repayment in 10 years. You will start out with a lower payment and every two years the payment will increase.
  • Extended Repayment: With this plan, you will start off with a lower plan, increasing every two years for up to 25 years. Unlike the Income-Driven plan though, this plan does not offer loan forgiveness.

Paying the Right Amount for You

Consolidation can help when you are paying off multiple loans. Consolidation is when you combine multiple different loans into one new loan. Typically, consolidating federal loans will void any protections and benefits received through them. However, if you have several private loans, consolidation could give you fewer loan payments to worry about each month, though the interest rate could go up in the process.

When paying off student loans, there is always a way to pay them off faster. Pay more than the minimum on your monthly payment. If you have room in your monthly budget, dedicate some of those extra funds toward your loan payments. Anything extra that you can contribute each month can help you to pay back your loans much faster and can cut down on your interest payments too!

However, if you can't afford to pay the extra amount and are having trouble taking on the minimum payments, reach out to your loan servicer. You don’t need to figure out your repayment on your own or leave it to bring down your credit. There are options for you to consider before giving up on your paying off your loans. Discuss any other options for loan repayment and consider changing your repayment plan altogether.

Start Saving Now

Having separate savings accounts for different things such as loan repayment, you can easily track how much money you have to use and how easily see if you can add more to your monthly payment. If you have direct deposit set up with your employer, ask to direct a certain amount of money you can afford to set aside to the savings account. Starting as soon as you can will go a long ways. Even if you haven't graduated yet, you can start a college savings account with a part-time job you have now.

Student loan debt takes time and patience to pay off, but by tackling it head-on, staying on top of payments and paying extra when you can afford to, you will find yourself moving toward financial freedom soon.


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