5 Tips to Help You Pay Back Your Student Loans

by Jessica Sommerfield · 6 comments


The average student loan debt now exceeds $30,000. No wonder an estimated 11% of student loans are in default!

The Department of Education already expanded repayment options like pay-as-you-earn plans (PAYE) and income-based repayment plans (IBR) over the last few years, but many students are still struggling with this financial burden well into their post-college years. Do you have student loans? How are you managing to pay the monthly payments?

Recently, lawmakers introduced a new bill that could make a big difference for graduates – and their employers. This bill would extend tax benefits to employers who choose to help their workers with student debt.

About 4% of companies in the U.S. already have programs like this, with maximum annual employee benefits reaching $4,400 a year. Under the terms of the new bill, these payouts would qualify as a tax deduction (just like the money employers contribute to their workers’ 401K accounts). With the incentive of being able to put the money back in their own pockets at the end of the year, more employers might be willing to start or expand these kinds of programs.

Tips for Tackling Student Debt Responsibly

Free money to pay back your student loans would be great, right? Although these kinds of programs are helpful, paying back the bulk of a student loan is ultimately your own responsibility. Paying off debt can be challenging, so here are a few tips for tackling student loans responsibly.

  1. Pay more than the minimum and/or double up your payments.

Like most other bills, student loans are usually due once a month. Paying a little more than the minimum required amount can help you knock out the debt sooner (use a debt repayment calculator to find out exactly how much) and avoid paying extra interest. If you receive bi-weekly paychecks, you could also set up an additional automatic payment on paydays (even if it’s only a small amount).

  1. Find your pay-off date and use it as an incentive.

Knowing it will take you 10 years to pay off your student loans is discouraging, but every little bit of extra you pay into the loan will make freedom day a little bit closer. Create a visual update every time you achieve a new pay-off date, and you’ll find more incentive to keep taking months and years off of the end of it.

  1. Use your tax refunds or education credits.

It’s tax season. Are you due to receive a refund or education credit? Instead of spending it, why not use the money to make a large payment on your student loans? The faster you can eliminate a monthly payment, the faster you’ll free up more of your budget year-round, rather than having to wait for your next refund check to have some “fun” money.

  1. Take on a side job or apply your annual raise.

If you’re already working full-time, more work is the last thing you want. That’s why you choose something fun, and only do it a few hours or days a week. When this money is set aside exclusively for paying your student loans, it can quickly make a dent. Secondly, when you get your annual raise, apply the difference to your loans rather than inflating your lifestyle.

  1. Consolidate and refinance – with caution.

Consolidating debt sometimes makes sense, especially if interest rates have dropped significantly. On the other hand, refinancing just to get lower payments while lengthening the duration of your loan will only mean paying more interest in the long run.

The new employer tax credit could create more incentive for your boss to help you with your student loans, but it’s your personal finance habits that will truly make the difference in getting out from under the burden of student loans, once and for all.

How much do you still owe? Can you do anything different today to pay off the debt sooner?

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  • WebbRowan says:

    Managing your loans mean managing your income and your budget. If you keep to paying on time, you’ll expect to finish paying just as the illustrations have predicted for you. If you’re saving money and making one-off lump sum payments when you can, you’re likely to have your loans paid off way before time!

    • David Ning says:

      With the ease of electronic transfers, I always make small payments into the loan whenever I can. Technically it’s a lump sum payment but it’s more like multiple small sums of payments. Do what works for you and you’ll be debt free in no time!

  • Harleen123 says:

    I got an educational loan from a bank. Fortunately the interest rate was low and my course fee was also not so expensive but I have my friends who do engineering and medicine who repay a lot for their loans. This would help them.

    • David Ning says:

      Student loans are truly getting out of hand. People with $400,000 and $500,000 in loans are still the minority but no longer unheard of. It’s crazy to even think that you are half a million in the red when you start out. Be careful out there or else you could be the next person who is in far too deep.

  • alexa katz says:

    Omg…it took me years to almost pay off all my student loans. I have $5000 left now, hopefully with your tips will be able to pay it off soon. Can’t wait for the day when I will be debt free

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