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Student loan smack down! How to conquer your student debt

Posted by Lindie Johnson on May 2, 2017 11:21:00 AM

The US student loan "crisis" is the result of soaring tuition, increased demand for professionals, and the collective borrowing by more than 70% of the country’s college students. With debt averaging about $35,000 for undergraduate students, repayment strategy is key. The good news is, most students are able to manage their student loans, even if they aren't happy to have them! Here are the best ways to conquer your student loan debt.

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Overpay

Paying the minimum is a surefire way to extend the length of your repayment term. Even a few extra dollars each month can make a big difference! If you have extra money, apply it towards your principle loan balance, every single time you make a payment. Tax refund? Put it towards your loan. Birthday money? Put it towards your loan. Bonus at work? Put it towards your loan! Get it?

Don’t extend repayment

It can be tempting to lower your monthly payment in order to fit it into what is probably a very tight, newly-minted, professional’s budget by extending the repayment term of your loan. Think very carefully before employing this tactic, as the cost is significant. Live like a new grad now so you don't have to do so in your thirties and forties!

Consolidate or refinance

Remember: when you borrow... time is your enemy. The point of refinancing is to decrease interest rates. If you can reduce that rate, a larger portion of each month’s payment will go towards your principal. That means paying down your loan faster. If you’ve borrowed federal loans, make sure you know the risks of refinancing. You may lose some helpful perks. But, if you’re not in a position to use those benefits, refinancing deserves some consideration. Just keep in mind that if you extend your repayment term, even with a lower interest rate, you could end up paying more in finance charges. Maintain the same or shorter term for your loan.

Consolidation is a process by which the federal government lender pays off your existing federal student loans and combines that debt into one, new loan. You’ll save yourself the hassle of managing multiple payments through multiple loan servicers. Save some money and simplify your life. You can’t consolidate private loans, but you can refinance them, so regardless of what you’ve borrowed you may be positioned to take some action.

Download RISLA’s refinancing guide or give us a quick call at 866-268-9419 to go over your options. You might be surprised by how much you can save!

Explore forgiveness programs

Most borrowers don’t qualify for federal forgiveness programs, but if you do, you absolutely must take advantage. If you’re a teacher or working in a public service job, ask your servicer whether you qualify! Get on the right repayment plan and submit the necessary paperwork. Be diligent and it will have a great payoff.

If you’ve borrowed from a private lender, you may still be eligible for loan rewards. RISLA, for example, offers its borrowers a nursing rewards program and $2,000 in loan forgiveness for qualifying interns. Don’t depend on these programs, as they’re uncommon. But do ask!

Trim your budget

As with any debt management strategy, careful budgeting is key. It’s particularly important for new grads, who are often tempted to spend new paychecks unwisely. If you can find a way to save $50-100 each month, you’ll be able to maximize your repayment. That’s not much money, and it doesn’t require major sacrifices.

  • Eat in. Restaurants are exorbitantly priced, so have your friends over and cook a meal. Enjoy their company and savev some money too.
  • Consider cancelling or reducing luxuries like cable. There are web and hardware-based options that can save you as much as $100 monthly, even if you’re paying for high-speed internet.

Take your tax credits

When tax season rolls around, make sure you’re maximizing your refund with education tax credits. Most recent grads are eligible for credits based on the amount of student loan interest repayment over the course of the prior year. Check your tax documents carefully to see if you’re eligible.

Make the most of your grace period and deferments

If you’re not required to pay anything, you should still be paying! Make sure you aren’t allowing interest to compound and you’ll minimize the damage you incur during deferments. The same rule of thumb applies to your post-graduation grace period. If you have your financial houses in order.

Topics: Borrowing for College, Student Loan Repayment