student loan debt

How to Manage Your Student Loan Debt

The number of Americans dealing with student loan debt is staggering. According to, 44 million Americans hold a collective amount of $1.5 trillion in student loan debt. That means one in four American adults are paying off student loans. It’s not just small peanuts either. The average amount of debt held by a student loan borrower is approximately $37 thousand in student loans. That number marks an increased by $20 thousand within the last decade and a half.

If you’re one of the 44 million Americans dealing with student loans, it might seem like the end is nowhere in sight. However, there are ways that you can better manage your student loan to pay it off easier and sooner.

Establish your budget

This might seem like a no-brainer, but it really isn’t for a lot of people! No matter how much debt you are carrying around, or how little money you are making, it is important for you to figure out how much extra cash you have to apply to your payments beyond the minimum payment requirement.

You can start small, but over time you’re going to want to increase the amount of money you are committing to paying off your loans. You can do this either by increasing your income or by decreasing expenses.

Cutting expenses is all about what you’re willing to sacrifice. Can you eat out less? Can you bike to work instead of drive? Can you forgo rent by living with your parents? These are hard questions to answer, but it is all worth it once you relieve yourself of that debt you’re carrying around.

Make Payments as Often as Possible – Aim for Twice a Month

This is a great trick that everyone struggling to pay off their student loans should consider. It’s also guaranteed to make a difference. All you have to do is take your monthly payment, divide it by two, and make two payments a month instead of one.

It might seem like that changes nothing, until you break down the numbers.

There are 52 weeks in a year, and if you’re making a payment every other week, that ends up being 26 payments a year. 26 payments a year equals 13 full payments in 12 months. Each year you’ll end up making an entire extra months’ worth of payments. This can and will have a huge positive impact when it comes to paying off your debt fast!

Target Employers that Offer Student Loan Repayment Assistance

This is a nice option for people who want to start paying off big chunks of your student loan debt fast. This is type of employer assistance is growing in popularity as a new employee benefit.

Basically, how it works is employers offer to put a certain amount of money – usually around $100 to $300 a month – towards their employee’s student debt. By working for a company that offers this kind of benefit, you can not only get help paying down your debt, you can also pay it down way faster.

If you are able to both pay the minimum monthly payment, and get several hundred dollars’ worth of assistance from your job, you can expect to save thousands of dollars of student loan interest over time.

Start With Your High Interest Loans

This is another no-brainer that you might not be applying to your debt as well as you could. If you, like so many Americans had to take out multiple loans, it’s important to know exactly what the interest rates of those loans are so that you can know where to put your money first. Don’t just throw cash at your debt and expect it to go away. You have to be strategic and figure out what cash should go where.

One of the best practices is to start by paying the minimum amount due on all your loans, and then apply any extra cash you have to the loans with the highest interest rate. That will help keep the fees down and keep the loan from ballooning out of control. Jeremy Hughes former head of Get Approved Finance Perth Western Australia suggests “any loans that have a high interest rate, usually credit cards are a good starting point, benefit from paying off early”.

Once you’ve paid off the loan with the highest interest rate in full, you then apply whatever extra cash you have to the next highest loan. You continue this practice – which is commonly known as the “debt avalanche” – until you have paid off your loans in full.

See if You Can Reduce Your Rates

An easy way to turn a big amount a debt into a smaller amount is to take advantage of interest rate reductions offered. A readily available reduction is offered when you opt to sign up for auto-payments. This helps in two ways. First, money is automatically taken from your account so you don’t have to worry about missing a payment. Then, you will likely be offered an interest rate reduction of .25 percent.

It might not seem like a huge change, but it can make a big different overtime. Other interest rate reductions vary depending on who your lender is. You should make sure to check your lender’s website to see how you can better take advantage of these offers.

Take Advantage of Tax Reductions

Now this tip won’t make all of your student debt disappear, but it’s important to remember to not leave any money on the table. The IRS allows you to deduct up to $2,500 of student loan from your taxes.

There are a few stipulations though. First, you have to had attended an eligible higher education institution, but that includes the vast majority of colleges and universities in the U.S. Then, you have to make sure you are eligible in terms of income. If you make over $80,000 per year you will not be eligible for the deduction. If you make over $65,000, you will only be eligible for a portion of the deduction. Other than that, you’re good to go!

Now go out there and save yourself some of your hard-earned money!

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