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8 Tips for Paying Off College Debt

Finances | By Dave Bowman

Let’s face it: the work doesn’t stop when you graduate from college. Paying off college debt is a challenge for many. Take a few minutes to check out our eight tips to help you pay off your student loans easier, faster, and smarter.

  1. Pay interest while you’re in school. For federal student loans and some private student loans, repayment doesn’t start until after your grace period (typically six months after you fall below half-time enrollment status, leave school, or graduate). If you are responsible for the interest accrued during school, paying that interest while you’re still in school keeps that interest from capitalizing (getting added to your loan balance). This can save you money in the long run by keeping your balance lower.
  2. Make student loan payments of half your monthly payment every two weeks. By doing this, you’ll find you’ve made an extra payment at the end of the year without even noticing it. By splitting payments among 26 weeks, you end up making 13 months of payments in one year instead of 12. This can save you as much as a year of payments and interest over the course of a 10-year repayment schedule.
  3. Put extra money toward your student loans. Whether it’s a tax refund, a work bonus, or birthday money, it may not seem glamorous to spend it on your loan(s). However, the overall impact can be great when you consider the interest you save when you repeatedly make extra payments of any size whenever you can.
  4. Take advantage of auto pay discounts. Having student loan payments automatically debited from your bank account each month can help you stay on top of your payments to avoid delinquency. In many cases, it has the added benefit of qualifying you to receive a small interest rate discount (usually .25%). Between the hassle and the interest, it’s worth the savings. Do it!
  5. Refinancing your student loans can help you maximize savings if you have good credit, steady income, and find loans that don’t require origination fees. With lower interest rates, you can reduce your monthly payments to help you save. If you can afford to, continue to make your previous higher monthly loan payment, and you’ll cut into the principal faster and pay your student loans off sooner. (There are exceptions: see our blog post on when refinancing makes sense and when it doesn’t.)
  6. Continue to live like a poor college student. Keep roommates a while longer, eat at home as much as possible, and generally continue living below your means. This way, you can put that new salary toward paying down your debt rather than financing a new lifestyle that, technically, you can’t really afford yet. You’ll have time for that later, but the sooner you pay off your student loan debt, the less interest you’re throwing down the drain.
  7. Look for repayment assistance opportunities. There are employers who help their employees pay student loans as a benefit. From several hundred to several thousand dollars a year, these benefits can add up. Similarly, some volunteer organizations such as AmeriCorps, Teach for America, and the National Health Service Corps, will fund student loan payments for volunteers who have sought-after skills.
  8. Choose fast wins or high interest as your debt payoff strategy. No matter which strategy you choose, you need to make all your minimum monthly payments to stay current. After that, there are a few different strategies. If you need to see results fast in order to stay motivated, put a large chunk each month toward the smallest balance so that you can pay one of them off and celebrate a win. After that balance is paid off, focus on the next smallest loan balance, and continue until you’re done. If you’re a patient, logical person who wants to save every penny you can, look at the interest rates on all your loan balances. After making your minimum payments, put a larger monthly payment toward the loan balance with the highest interest rate to save money overall.
Dave Bowman

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Dave Bowman is the Regional Director for U fi Student Loans and is expertly skilled in many aspects of financial aid, student loans, and financial management. Dave holds a Bachelor of Science in Business Administration and has worked in a number of areas in higher education finance, including positions for banks, guarantee agencies and loan servicers. Dave has spoken at numerous colleges, universities, and financial aid conferences all across the United States.

View all posts by Dave Bowman