Most students graduate college with some debt. In 2019-20, 55% of all students who graduated from public and private nonprofit four-year universities had an average debt level of $28,400. The key to working through your student debt quickly is to stay organized. You can take some steps while in college. You can take others after graduating.
Here are some tips for paying off your student loans quickly and with less stress. While you’re in college:
Only borrow what you need.
Review your financial aid annually to see what you need to borrow for the upcoming academic year. Be sure you’re using your full eligibility for subsidized federal direct loans. The federal government covers the interest for these loans while you’re in college. Check out subsidized federal loans before considering other loan options.
Pay the interest.
If you have some extra funds available, paying the interest on your student loans while you’re in college (and while the loans are deferred) can help reduce how much your student loan debt grows.
Get a work-study or part-time job.
It may seem like the cost of college is too large to pay off with money you earn from a work-study or part-time job, but every penny counts. Look at your college job board to find jobs you can manage while taking classes. Look for work-study eligible jobs if you’ve been awarded work-study on your financial aid offer. Consider things such as working on campus, waitressing, working at a daycare or day camp, food delivery, or research. Earning money for everyday expenses can reduce the amount you need to borrow.
If you’re in college and need more help or guidance, contact your financial aid office to discuss your borrowing.
Review your loan repayment options.
You’ll have several different repayment options if you’ve borrowed Federal Direct Loans. Your best repayment option depends on a few factors, including income. Use Federal Student Aid’s loan simulator to identify the best repayment plan for you. Based on your career path, check to see if you’re eligible for any federal student loan forgiveness programs, such as public service or teacher loan forgiveness. You could qualify for public service loan forgiveness if you work for the government or nonprofit organization. Learn more here.
Create a budget.
Sticking to a budget may seem obvious, but remembering to do so is the best way for you to stay organized and in control of your finances. Assess your spending habits and fixed costs. Come up with a plan to save a little each month to pay down your debt. Set up an account designated for paying off your student loans. Doing this will automatically transfer a specific amount of money to savings to control your spending.
Make larger payments when possible.
Reduce the overall payoff time by making additional payments to your principal balance. Cutting down on the overall balance will decrease the duration of the loan period and the interest accrued.
Use the student loan interest tax deduction.
The federal government offers a student loan interest deduction on your taxes for interest paid during the year on qualified loans. This can equal a deduction up to $2,500. Don’t miss out on this deduction.
Ask your employer about repayment assistance.
Some employers offer student loan repayment benefits and can contribute money to help pay off your student debt. Companies such as Carhartt, Carvana, Peloton, Chegg, Google, and Fidelity Investments offer their employees repayment benefits. Some employers may even provide 100% loan forgiveness. Ask your human resources officer if your company can help with your student loans. If they can’t help you, you can apply to companies who do help with student loans.
After college, contact your loan servicer to help you stay on track to repay your loan.