How to Eliminate Student Loan Debt

Nearly two-thirds of people in their twenties carry student loan debt and many make late payments or defer their loans so interest and fees add up and create more debt. Although, when you get that first bill after you graduate, it may seem like you'll never pay off such a huge sum, there are ways to eliminate your student loan debt and build good credit in the process.

Instructions

Difficulty: Moderately Easy

1. Consolidate. If you have more than one student loan, you can often consolidate them into one loan, which will allow you to have one low monthly payment and interest rate. You'll be less likely to miss payments or make late payments if you only have to manage payments to one source.
2. Choose the right repayment plan. Repayment plans can include a standard, minimum monthly payment that does not change for the life of the loan, a graduated payment that increases each year until the loan is paid off, or an income-contingent plan by which the payment is dependent upon your salary. Some loan types allow you to change your repayment plan annually.
3. Keep good records and keep your account current by informing your lenders of any address changes or changes of any other important information. Hiding from student loan debt will not help eliminate it.
4. Communicate with your lenders to make other arrangements if your financial situation changes and you anticipate trouble keeping up with your regular monthly payments If you contact your lenders when difficulty with repayment seems evident, but before your account becomes delinquent, they can help you get back on track.
5. Create a budget and stick to it. Itemize your monthly living expenses and required payments and then deduct the total from your monthly income. The balance left over is what you will have available to pay off debt.
6. Look for ways to increase your ability to pay. Even if you're able to pay as required, the faster you pay off the debt, the less it will cost because you'll pay less interest. Use savings or investments you may have to pay down debt balances or consider getting a second job or putting in more hours and devoting that salary exclusively to paying down your student loan debt.
7. Take advantage of the abundance of free, expert assistance you can call upon to help you deal with your student loan debt. Contact a financial aid advisor at your school or a student loan advisor at the US Department of Education.

Tips & Warnings

• Don't default on your student loans. If you become delinquent, you run the risk of ruining your credit rating, which can interfere with you getting a mortgage and even a job in the future.
• If you choose to defer your loans for reasons such as you return to school, become temporarily disabled or are experience economic hardship (such as unemployment), keep in mind that interest usually accrues during this time so a deferment can add to the total amount of debt you must pay.

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