How to Manage Your Student Loan Debt

As weird as it might sound, we had a lot of fun talking about student loan debt in the last episode of Financial Conversation.

It’s a topic we’re all too familiar with, as we’re sure many of you are.

Why is that? A staggering 7 in 10 seniors who graduate college are burdened by student loan debt. The total student loan debt in America is a whopping $1.3 trillion.

If that wasn’t crazy enough, there’s even a real-time “student loan debt clock” available so you can watch the total climb higher and higher.

All right, enough with the stats. If you’re like us and are feeling overwhelmed with your student loan debt, and haven’t listened to our podcast (where we share some of these awesome tips), then read on.

Want to learn how to successfully manage your student loan debt so it doesn't feel like you're drowning in it? Here are 5 tips that will help you.

Get Comfortable With the Numbers

Many of our peers are unaware of exactly how much student loan debt they have. That’s not going to help you. We know it’s hard to face the numbers, but that’s your first stop in taking control of the situation.

If you have federal student loan debt, you can visit the National Student Loan Data System for Students. You just need your FAFSA ID to access your account, but if you forgot it (we won’t tell anyone), you can easily reset your information.

This will give you your total balance across the board, even if you have multiple student loan servicers.

Do you have private student loans? The easiest way to find your balance is checking your credit report, which you can do for free at annualcreditreport.com. Your debt totals should appear there (along with any other debt you may have, like credit card debt).

Create a Debt Payoff Plan

Now that you’re armed with numbers, you can continue to create a plan to pay off your student loans once and for all.

If you’re determined to kick them to the curb sooner than later, it might be good to know that you can pay them off early without a penalty. Being paid ahead is great!

The easiest way to tell if you can pay extra toward your loans is to see how much money you have left at the end of the month, after all your other necessary expenses.

It helps to have a budget created, but if you don’t have one, that’s okay. By tracking your spending, or using software like Mint or Personal Capital, you can compile your expenses together.

Grab your income, subtract your expenses, and see where you stand.

If you have money leftover, can you dedicate a portion of that to your student loans?

If you don’t have anything leftover, then it’s time to evaluate your spending habits so that you get closer to being in the black.

Can’t Afford Your Student Loan Payment?

Many young adults are in the opposite boat and can’t afford their minimum student loan payment.

With lower salaries and a difficult job market, it’s not hard to figure out why. But what’s the solution?

If you have federal student loans, you actually have quite a few options available to you. Your first stop is talking to your student loan servicer about them. They can switch your repayment plan (if necessary) and grant you forbearance and deferment as well.

Not familiar with these options? We recommend checking out the official site of the U.S. Department of Education that breaks everything down. You might not be eligible for every single option listed there, but it’s worth investigating if you’re having trouble.

The last thing you want to do is miss a student loan payment, as that could make you delinquent on your loans. That means your credit score takes a hit. Defaulting on your student loans (not making a payment for more than 270 days) is even worse. Don’t let it get to that point.

What can you do if you have private student loans? Again, talk to your lender. They’re your point of contact throughout this, and it’s important to communicate with them so that if something does happen, you have it on record you reached out to them.

Some private lenders are able to grant forbearance, and some may let you skip a month of payments. While it’s not recommended (as you’ll have to make it up somewhere by paying more in interest!), it can be used as a last resort.

You can also look into refinancing your student loans at a lower interest rate, but this is not a one-size-fits-all solution, nor is it a cure-all for your student loan woes.

Why? If you refinance federal student loans with a private lender, you lose all of the federal benefits like deferment, forgiveness, and Income-Driven Repayment plans.

So while you may save money by lowering your interest rate, be aware that there are trade-offs!

Try Focusing on Earning More

We’d be remiss if we didn’t mention focusing on earning more rather than cutting back. While we’re all frugal in our own ways, there’s a reason we became freelancers.

Most of us found that we were getting paid more (aka: what we are worth) by paving our own way. There’s only so much you can cut back on, but earning more is (theoretically) unlimited.

If you’re having trouble finding a decent-paying job (or any job at all), try freelancing. Think about creative ways you can earn money from your hobbies or skills. People are willing to pay for a lot of things these days, and freelancing online provides a lot of flexibility!

Don’t Give Up

It’s incredibly difficult to discharge student loan debt in bankruptcy. Don’t fall for anything you might hear about getting your loans magically forgiven or discharged.

There are a few scams going around that target graduates. If it sounds too good to be true, it likely is. Do your own research and figure out the options available to you so you can conquer your student loan debt once and for all.

Have a Laugh at Our Bloopers

We know, talking about student loan debt isn’t usually fun or cheerful, but we try our best. Give our bloopers a listen if you need a pick-me-up!

Financial Conversation

Welcome to Financial Conversation! This website and podcast is dedicated to helping spread the word that money doesn't have to be a taboo topic.

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