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Tips For Paying Off Student Loan Debt

Tips For Paying Off Student Loan Debt

It's really difficult to get ahead in life and, as a result, student loan debt is a lot more common than people think. If you're struggling with it, you're probably sick of how much money you've already borrowed just to start building your credit rating.

But don't give up hope just yet! If you want to save the most money, here are some tips on how to manage your loans and relieve some stress in the process.

Tips for Paying off Student Loan Debt:

The first step is achieving an intentional mindset which is important because it will help you avoid running into financial problems later on in life as well as bad behavior that can lead back into debt such as gambling or overspending regularly.

Track your spending:

There are many free online tracking tools which you can use to keep track of your spending. These include mint.com, which offers a simple and easy way to track transactions and can also screen spending patterns to help you identify areas where you can improve.

Similarly, creditKarma offers a detailed analysis of your credit report, risk scores and allows you to make informed decisions about how you want to manage your current loans as well as future loans.

Avoid the temptation of credit cards:

Credit cards tempt people into making purchases they cannot afford at the time because they offer easy access to cash. You know that you'll start making payments slowly and then, without realizing it, you find yourself overextending your credit. While the interest rates on a credit card may not be as high as those on student loans, your spending habits become an advantage to the credit card company because you'll have nothing left to pay them off.

Payment plan:

In addition to creating an itemized list showing all your financial commitments, make sure to establish a payment plan with your loan company. If it's not a fully disclosed account with the full outstanding amount due at the end of each month and minimum payment requirements established by their internal policies, there will be no way for them to help you out if you find yourself in trouble.

Pay off your smallest loans first:

This might sound backward or a bit simplistic, but it's become a popular recommendation to focus on the loan that is the smallest and pay it off first. In essence, this advice means paying your student loan on time every month and then going after other loans which are larger than it. If you have credit card debt, eat away at the smaller debts before tackling the bigger ones. This will help boost your FICO score by showing that you have a large amount of debt in the past but have shown a record of making payments on time in the future.

In addition, you can create a budget for your cash flow and make sure that each month you leave a buffer at the end of the month which will be dedicated to paying off smaller loans. You should never let any debts go undecide.

Make sure you can get a job:

If this is your first time out in the world with student loans, there's no need to panic just yet. While it might look bad on your credit score if you have nothing else to show on it, being able to continue making payments in order to pay down principal or interest can prolong debt repayment even further as well as boost long term earnings levels in the future.

You should also look for other ways to increase your income as well such as job interviews or telecommuting opportunities which can help you pull in a small amount of extra cash each month.

Cut up or sell unnecessary items:

Most people think that if they don't spend all their money on flashy, new items, their debt collection agencies won't take any notice of them. This is a false assumption. While it definitely doesn't hurt to replace something when it starts looking old and worn, you should try to use this opportunity to get out of debt with the most efficient spending strategy possible.

You should sell old items which you no longer need or use to raise extra cash and use it towards your student loan debt. For example, if you have old gaming systems or video games, selling them online at consignment stores will get some money in the bank.

Similarly, if there are items which you have laying around that have lost their value due to aging or wear and tear such as appliances or furniture, get rid of it as quickly as possible. A quick sale will save you from paying two months of rent for an item which isn't even worth that much and can help you avoid getting trapped in a vicious cycle of spending too much on things which aren't really necessary for survival.

Renew your student loan:

If you're going to be paying off student loan debt for the next 15-20 years, there's a good chance that you'll have trouble making payments. So, make sure to renew it as soon as possible so that you can avoid the minimum payment requirement and make sure that your loan is approximately at or close to 10% of your gross monthly income. You can also cancel a student loan if you have one just before it expires at no cost.

Manage credit card debt:

While student loans are a drain on finances, credit card debt can be just as destructive to your financial future if left unmanaged. You should put most of your current spending on your credit cards in order to get the most out of those payments while they are still coming directly out of your bank account. Once you notice that you have no money left in your bank account and only a few days worth of minimum payments left, it's time to start looking for other jobs or anything else that offers some extra cash.

In addition, try to look for other offers online or in the newspaper which you can use as a source for getting extra cash to pay off those credit cards.

Make the most of your paycheck:

Most people view their monthly paycheck as a welcome relief which allows them to pay rent or other monthly bills. Unfortunately, many don't think about how they can use their check to get ahead when it comes to paying off student loans. While there's no magic formula for managing your income so that you have enough left to pay down student loans and still have money left over for discretionary spending, you can create a budget which will help you manage your spending.

You should only make things to buy for yourself or give money towards your student loan debt (which you will eventually pay off) if you actually need it. Don't be lured into buying something which you don't need just because it's inexpensive and available in a store. This is a common trap that many people fall into.

While there's no chance for this advice to give any positive impact on your credit score, you can lower expenses such as rent, insurance and taxes as well as figure out how much money is left over on each paycheck after all the bills are paid. In addition, you can use that money to pay off loans.

Managing your income and spending will take some time to get used to, but if you put in the effort, you can use your paycheck to pay off student loans as soon as possible.

Make a list of other options:

If your student loan debt is out of control and is starting to seem insurmountable, don't give up just yet. While it's not advisable to have a certain amount in interest on top of the principal which you already owe, there are laws in place which protect students who are unable to make their payments due to unexpected life circumstances such as unemployment or job loss.

If you are having trouble paying off your student loans, you can file for an extension to pay off your debt and continue making payments. However, make sure that you have a budget which allows you to pay at least a small amount of principal and interest each month as well as not just leave it in the hands of the IRS.

If this is not something that you can manage, there are many different options available to help get out of debt without having to go through bankruptcy. You can also contact various student loan relief organisations in order to find out more about their good works and how they may be able to help you get closer to paying off those loans.


While it is sometimes scary to think about signing up for student loans and putting your future at risk, the truth is that most students are able to manage their student loans and make them a part of their life for the foreseeable future. However, if you find yourself divorced from reality, stuck in an unmanageable debt cycle or trapped with huge student loans which are getting in the way of your goals and ambitions, now may be the time to get out of those debts while you still have time.

The sooner you reduce your debt burden, the more time you will have to find a new job or start a new business which provides long-term income. With free time on your hands, you will also have the opportunity to start increasing your savings and put that money towards paying off those student loans.

Hopefully, by taking advantage of this guide, you will be able to start reducing your student loan debt quickly and get on with making a better life for yourself.

Posted on Sep 03, 2013, in Money Saving Tips, Student Loans and tagged Debt, Student loan

Any information contained within the contents of this blog are opinions and suggestions of the writers and do not necessarily reflect any policies or positions of the credit union. Any reference made to products or promotions are not guaranteed at any time. This information is not intended to be considered financial advice. It is provided for your education only. Community 1st Credit Union is Federally Insured by the NCUA.