3 Strategies for Paying Back Student Loans

Are you (or someone you know) paying on Student Loans? I AM!

Student loans help many people achieve their educational goals. They can turn a dream into a reality. However, upon graduation, those student loans have to be paid back.

I have shared my Student Loan Debt Confession at mostly all of my speaking engagements. To quote myself, “I am extremely bitter about my Student Loan Debt.”  Not just about the amount that I still owe but the fact that I actually chose to accumulate so much student loan debt. The irony is that many people go into student loan debt to pay for an education and degree but are unable to find a job in their field or, for some, at all.

The balancing act of finding a job along with the basic costs of living with paying back student loans can be overwhelming and sometimes even financially crippling. However, there are some student loan payback strategies that can make paying off student loan debt manageable.

Snowball Effect

You may be aware of this strategy for paying off regular debt. However, if you have several small student loans of $5,000 or less, pay more on the smallest loan to pay it off faster. Once that loan is paid off, use the payment from the previous loan and apply it to the next loan payment to pay that one off faster. Continue this process until all student loans are all paid back.

Consolidation

One of the most basic student loan payback strategies is to consolidate the loans. If you owe on more than one student loan, rather than balancing multiple payments, which can be hard on cash flow, you can consolidate them into one payment. This means one bill each month and a much easier time managing your money.

Repayment Plans

There are four different types of repayment plans. Choosing the one that best meets your needs can mean the difference between barely making ends meet and living well. Here are the four types of repayment plans to consider.

• Standard Repayment Plan – This repayment plan means you repay your student loans over the course of ten years. You agree to a fixed monthly payment.
• Graduated Repayment Plan – This plan makes room for the fact that it may be difficult to find a job right after college. Your monthly payments are lower for the first two to five years. Then increase over the remaining years. The plan allows for ten years to pay off your student loans.
• Extended Repayment Plan – This allows for the smallest potential monthly payment and gives students the opportunity to repay their loan for up to thirty years. The downside to this payment plan is that you will pay more interest over the life of the loan.
• Income-Contingent Repayment Plan – Finally, this last payment plan offers a twenty-five year repayment plan and bases monthly payments on the borrower’s income and financial commitments, including family size.

Paying back student loans can seem overwhelming but doesn’t have to be a financially crippling experience. Know what you owe, consider the snowball effect or consolidating into one monthly payment and take a look at your repayment options. You have from ten to thirty years to pay back your loan(s).

What are other successful strategies for paying of Student Loan Debt?