Tips for Paying Back Student Loans and How to Get Out of Debt

Recent graduates are faced almost immediately with the repayment of their student loans, which can feel like a very daunting task. These tips will help you to manage your debt effectively and pay off student loans in the fastest and most efficient way possible.

Paying Back Student Loans: Know Your Loans

One of the best tips for paying back student loans is to know your loans well. Be aware of how much you borrowed, how often you need to make payments, and what the interest rates are. Also, ask about any special ways you can get loan credits for making a certain number of payments on time, or reductions in interest rates. For example, many lenders will give you an interest rate reduction of 0.5% if you pay your loans by automatic withdrawal from a bank account.

Paying Back Student Loans: Stay on Standard Payment Plan

Many student loans have the option of being paid back in a variety of payment plans, from being in deferment while you are unemployed, in school, or in an AmeriCorps position. They also have graduated repayment plans, where you make larger payments as your income increases, or plans in which you only have to pay the interest over a period of time.

My best advice is to stay to the standard repayment plan unless you absolutely have to make smaller payments. If you are paying interest only, you are not making a dent at all in paying back the money you actually borrowed, and you will end up paying so much more money during the repayment period.

Paying Back Student Loans: Make Payments on Time

Student loans are a line of credit, and especially for young adults, are a very important element of your credit score. Therefore, it is of utmost importance that you make your payments on time every month. Even being just a day or two late a couple times will hurt your score a lot, so make your loan payments a financial priority. If you absolutely cannot make payments on time due to financial difficulty, call before the payment due date to see if you can get on a different payment plan better suited for your current income.

Paying Back Student Loans: Make Payments Aggressively

Because your student loans are continually being charged interest, the faster you pay them off, the less you will end up paying over the life of the loan. If you have some extra money, consider putting it toward your student loans instead of buying something special for yourself. This will free you from debt much sooner!