Conquer Your Student Loan With a Debt Repayment Plan That Works

by Melanie Lockert · 9 comments

After graduating from college with student loan debt, it can be difficult to come to terms with the debt repayment schedule.

If you’re like me, you might even be surprised by how much interest had accrued while you were in school, or shocked by how much money you actually owe.

Student loans, while often considered the “good” kind of debt, are still debt and should be taken seriously.

I never took my student loan repayment seriously, that is, until after I took on more debt and graduated with my master’s degree. In total, my debt load equaled $81,000 which consisted of$23,000 from my undergraduate degree and $58,000 from my master’s degree.

I chose to go to a fancy private school for my master’s and took off a bit more than I could chew. But with a student loan repayment plan, I’m paying off debt on a small salary and making it work. Currently, I have roughly $35k to go and have paid off the majority of debt, $30k of it, in the past three years.

Here’s the student loan repayment plan I’m using, and that you can use for your budget, too.

Step 1: Know Your Debt Total

While this may seem obvious, it’s something that we often procrastinate on. The first step in the process is to know how much debt your student loans equal, down to the penny. It’s important to know how much you actually owe, not what you think you owe. I thought I graduated with $18,000 in debt with my Bachelor’s, but it ballooned to $23,000 by the time I graduated.

Start by logging into to your lender’s site and seeing the actual total (and if you have more than one student loan, check all the balances). When I graduated with my master’s and still had $68,000 left to go, after paying the minimum on my undergrad loans for years I felt sick to my stomach and hopeless.

But I got myself into debt and knew I had to get myself out. While knowing the total was painful, it was the move that got my head out of the sand and propelled me to action.

Step 2: Know Your Interest Rate

Another vital part to the student loan repayment process, is knowing your interest rates. An interest rate is a percentage you are charged to use the lender’s money, which gets added to your principal balance.

Essentially, it’s like a fee you’re paying back in order to have access to those funds. Interest rates can range from low to high depending on what type of student loans you received. Public loans from the federal government differ greatly from private loans, and undergraduate loans differ from graduate loans — it also depends on the year you entered school, as legislation changes. As previously stated, my interest rates range from 2.3% to 7.9%, which is a huge range.

Knowing these numbers helped me choose which type of debt repayment plan to move forward with, and really put it into perspective how much extra money I was paying towards debt.

Step 3: Choose a Debt Payoff Method

Now that you know your debt totals as well as interest rates, it’s time to choose a debt payoff method. There are different methods you can choose to create the best plan that will work for you.

Snowball: Personal finance gurus like Dave Ramsey often tout the benefits of the snowball debt payoff method. The snowball method focuses on paying off debts with the smallest balances first, regardless of the interest. The psychology behind this is that when you pay off the smallest balance first, you’ll be more motivated and feel energized in the debt repayment process through small, yet successive wins.

Avalanche: The avalanche method focuses on high interest debt first. I personally use the avalanche method as there is a huge difference between my interest rates for my undergraduate and graduate loan.

I owe $6,000 at 2.3% and $29,000 with a mix of 6.8% and 7.9% interest. Because my balance and my interest rates are so high, I’m being charged nearly $200 a month in interest. I despise interest with a passion, so I’m determined to focus on the debt with the higher interest rate. While the progress may seem slow, knowing that my daily interest rate is getting smaller gives me the motivation I need.

Snowflake: There’s another method that’s popped up more recently where you put any and all extra money towards debt. Start by categorizing your debts like in the snowball method then create a plan to transfer any additional funds, from overtime at work, weekends jobs, bonuses, tax refunds, freelance income, birthday money, and the like, to your accounts. You’ll be surprised at how quickly these small snowflakes of money add up to reducing your debt balance.

When choosing a debt payoff method, pick one that works with your budget and feels right for you. You can even create a hybrid method and do what feels best.

The main point is to have a plan and get started. Along the journey of debt repayment, celebrate both big and small wins and know that debt doesn’t have to be permanent.

Step 4: Stay Motivated Using Online Tools

One of the biggest things I believe, is that you shouldn’t pay off debt alone. Paying off debt can feel isolating, lonely, and downright shameful. Find a like-minded community of people that can help propel you further to achieve your goals.

Use online tools, or mobile apps, to track your debt repayment and stay motivated. One of the toosl I use is, which helps calculate my monthly payments based on the desired debt free debt. In addition, you can see your daily interest rate, and how much money you’ll pay in interest over time. Not only that, but you will see how much you will save by paying off your debt early. Their blog offers many great resources and a community of folks that are also paying off debt.

Step 5: Just Get Started

I personally know how difficult paying off student loans can be. It’s tough to continue to pay for something like a degree that you got years ago, and may or may not be using at the moment. While debt repayment can be overwhelming, it is possible to get out of debt.

Empower yourself with knowledge and come up with a plan to get started. Stick with it and find your community of people that can help you along the way.

What’s your strategy for repaying your student loans? How do you stay motivated to pay off debt and reach big financial goals?

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  • Robert says:

    Great information summarized in a way to really analyze the different types of repayment options. Student loans put many young people in debt that are not mature enough to know the ramifications, so any spotlight on getting out of this type of debt is helpful.

  • Hannah says:

    I have a private loan for my undergraduate degree and a public one for my graduate degree. I put more money than required on the private one, and only the exact amount for my public one. Why? Because the public one will get $60,000 in 10 years (this depends on your field) and completely forgiven in 25. There’s no possible way I’m able to pay back what I owe, so that’s my method!

  • Andre Justin says:

    Melanie, your suggestions are very valuable. Thanks for them.

  • Kate says:

    I graduated in 1970, with $5500 worth of student debt (which would be $50,000 or so in today’s money), into the middle of the Nixon Wage Price Freeze and along with 79 million other Boomers all looking for work. I paid my loans off in 5 years, just before I left California for New York (it’s a long story). My parents made me take out working papers when I was 15, and work summers in factories and pay my own way in the Fall (school charges, dentist, eyeglasses, piano lessons etc.) And my father explained something to me that apparently most parents omit: “If you major in Rock and Roll,” he said, “and you come out of school with no job skills, YOU STILL HAVE TO PAY THAT MONEY BACK.” Every year I see Poor Poor Pitiful Poor girls (it’s usually girls) who have spent $60,000 majoring in Gender Identity in Rock and Roll, or Theatre Arts, or Museum Studies, who don’t even have the job skills to work at Starbucks, and are horrified to find out that the bank wants their money regardless.

    • Melanie says:

      It’s tough. I also majored in something equally unmarketable, but I worked all throughout college and was never afraid of hard work. Also, even though I don’t like student loan debt and think education should be more affordable, I take responsibility for my debt and will pay it all back.

  • Katie K. says:

    Great run-down on the easy strategies you can use to pay off student loan debt. It also translates over well to a larger conversation on how to pay off all of your debt. These ideas can be used to smartly pay off virtually any type of debt(s) you have. Of all the finance topics, rapid debt reduction is my favorite! These types of articles help to keep me motivated – thank you!

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