How to Get Rid of School Loan Debt

The ease with which you can get rid of student loan debt will depend on how much you've borrowed and how much you're making when it comes time to start paying off these loans. Typically, a college graduate has a six-month grace period from the time they stop attending school before they must begin paying off student loans.
Since college graduates very rarely begin their careers with a top-dollar salary, employ some frugal spending and saving skills, along with some tricks for saving more money in the long run on student loan payments to pay off student loan debt quickly and efficiently.

Things You'll Need

• Budget worksheet Contact information for loan lender(s)

Instructions

Pay off Loans Faster

1. Establish how much money can go toward paying off student loans each month by creating a budget worksheet that subtracts monthly expenses such as rent, food, clothing, utility bills and savings from your monthly income. Once you know what's left over, you know how much you can devote to paying off student loans.

2. Pay off higher-interest credit card debt before paying off student loans, if you can. If you are paying more than you have to on student loans, it is more prudent to apply the extra money to the higher-interest debt. The faster you get rid of the extra payment per month toward credit cards, the sooner you will be able to apply that money toward paying off student loans.

3. Create a savings account and if you can, stash away extra cash. If you are in a position where you can afford to set aside cash every month, allow it to accumulate until you have saved up the equivalent of at least three months worth of expenses. Then, apply anything you are able to save beyond that amount to your student loans.

Negotiate with Your Lender

1. Meet with a financial aid counselor at your college or university before graduating to evaluate the amount of student loan debt you will have and your options for paying it off. Financial aid counselors can help you establish a repayment plan and help you skillfully negotiate with your lender to get the best deals and rates.

2. Study loan consolidation plans for federally subsidized and unsubsidized loans. Since rates on these loans consistently change and vary depending on the market, be sure lock in the lowest interest rate possible on these loans to keep your monthly payment from fluctuating, then consolidate them into one loan payment per month. Loan consolidation is a great way to save money on your monthly payment, which can help you get rid of other higher interest debt quicker and then apply the extra money toward loan payments.

3. Shop around for loan plans that might serve as more frugal substitutes for private student loans. These loans, which are given out by banking institutions and not by the federal government, tend to have much higher interest rates and sometimes cannot be consolidated. If the bank does allow you to consolidate the loans, it is often at an interest rate that will fluctuate with the market. Try to find a bank that will give you a fixed rate loan at a lower interest rate, then use this as a negotiating chip with your current lender to see if they budge. Ask a financial aid advisor at your college for help finding lenders who will consolidate private loans, or research possible options at local banks so you are able to access the bank quickly should you have any questions or concerns.

Tips & Warnings

• Get a second job or freelance to raise extra funds for paying off debt, especially if you are paying off credit card debt in addition to your student loans. If you can afford it, always pay a little more on your student loans that you need to by calculating how much extra per month you must pay on your loans to pay the equivalent of one to two extra loan payments each year.

• If you can afford it, do not take advantage of offers to put off paying your student debt. While many banks offer income-based repayment plans and grant reprieves from paying if you are ill, unemployed or unable to pay for some other reason, it is easy to get unused to having to pay each month. When the loan comes due again it can catch you unprepared. Make sure your college financial aid officer(s) give you a wide range of repayment options and access to a wide array of loans. If the staff seem to be pushing a particular type of loan from a particular bank very heavily, this is suspect--and illegal.