10 Tips On Reducing Student Loan Debt

We have outlined below 10 Tips on Reducing Student Loan Debt to help students borrower smarter, and make the student loan debt they may currently have more manageable.

Reducing Student Loan Debt Before or While Attending College

1. Use free money.
Exhaust all of your free money for college options, such as scholarships and grants for college.

2. Start saving early.
Parents and/or students can create a savings account or invest money in tax sheltered funds (529 plans) early on, to prevent having to take out large sums in student loans.

3. Work while attending college.
Consider a part-time or even a full time job to help cover college expenses.

4. Chose your school carefully.
Weigh your options when choosing what college/university to attend. Many times you can attend a community college for the first two years at about half the cost of a state university or private college, and then transfer to the college or university of your choice to finish your degree.

5. Federal over private.
Always choose federal student loans over private student loans. Many students fail to file a FAFSA and/or exhaust all of their federal financial aid for college.

6. Consider CLEP.
Do not take out student loans for what you already know! The College-Level Examination Program (CLEP) gives you the opportunity to receive college credit for what you already know by earning qualifying scores on any of their examinations. Earn credit for knowledge you’ve acquired through independent study, prior course work, on-the-job training, professional development, cultural pursuits, or internships.

7. Have a definitive path.
Many college graduates have student loan debt from courses they did not even utilize towards their current degree. There is no harm in taking some time to think about the career path you really want to take before taking out student loans for college, make your money count!

8. Do your research.
Many times people get locked into bad student loan rates or student loans that are not as flexible as they may have anticipated. Taking some time to look over multiple student loan lenders and ask questions, is something small that can be done to save you big on student loan debt.

9. Consider a cosigner.
If you do need to take out private student loans and your credit is less than fantastic, consider doing so with a cosigner whose credit is better than yours. Even though you are approved for the private student loans, sometimes you may get a better rate if your cosigners credit is better than yours.

10. Ask questions and get informed.
Get informed by those who specialize in college financial aid and student loans, and utilize the resources at your colleges and high schools.

Reducing Student Loan Debt After Attending College

Reducing student loan debt can be a significant challenge, but there are several strategies you can consider to help manage and ultimately reduce your debt burden. By implementing these strategies and staying proactive about managing your student loan debt, you can work towards reducing your debt burden and achieving financial stability.

1. Make Extra Payments.
If you have the means, consider making extra payments toward your student loans. Even small additional payments beyond the minimum requirement can help you pay off your loans faster and reduce the total interest you’ll pay over time.

2. Focus on High-Interest Loans First.
If you have multiple student loans, focus on paying off the ones with the highest interest rates first. By targeting these loans aggressively, you can minimize the amount of interest that accrues over time.

3. Explore Refinancing or Consolidation.
Refinancing involves taking out a new loan with a private lender to pay off your existing student loans, potentially at a lower interest rate. Consolidation involves combining multiple federal student loans into a single loan with a fixed interest rate. Be aware that refinancing federal loans with a private lender may result in the loss of federal borrower protections, such as income-driven repayment plans and loan forgiveness options.

4. Take Advantage of Employer Benefits.
Some employers offer student loan repayment assistance as part of their benefits package. Check with your employer to see if they offer any programs to help employees pay down their student loan debt.

5. Utilize Loan Forgiveness Programs.
Depending on your profession and circumstances, you may be eligible for loan forgiveness programs. Public Service Loan Forgiveness (PSLF), for example, forgives the remaining balance on Direct Loans after you’ve made 120 qualifying monthly payments while working full-time for a qualifying employer in public service. Explore whether you qualify for any forgiveness programs and what steps you need to take to participate.

6. Consider Income-Driven Repayment Plans.
Income-driven repayment plans adjust your monthly payments based on your income and family size, potentially lowering your payments to a more manageable level. If you have federal student loans, explore whether you qualify for income-driven repayment plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Revised Pay As You Earn (REPAYE).

7. Seek Additional Sources of Income.
Increasing your income through side gigs, freelance work, or part-time employment can provide extra funds that you can put toward your student loan payments. Consider leveraging your skills and interests to generate additional income.

8. Live Frugally and Budget Wisely.
Evaluate your spending habits and look for opportunities to cut costs and save money. Creating a budget and sticking to it can help you prioritize loan payments and allocate funds toward debt reduction.

9. Seek Financial Counseling.
Consider seeking advice from a financial counselor or advisor who can help you develop a personalized plan for managing and reducing your student loan debt. They can provide guidance on budgeting, repayment strategies, and other financial matters.