How to Tackle Your Student Loan Debt

April 11, 2016
How to Tackle Your Student Loan
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The burden of student loan debt isn’t going away anytime soon for many Americans. Unfortunately, I am included in this number with $80,000 worth of student debt hanging over my head. According to recent studies, approximately 40 million Americans have $1.2 trillion in student loans. Sadly, 1 out of 4 of these borrowers is dealing with the consequences of delinquency or default on their loans.

The only way to reverse this increasing trend is to focus on sustainable strategies that will help current student loan borrowers get out of debt and prevent future college students from borrowing more than they can reasonably afford to pay back after graduation. Student loan debt must be paid back regardless of postgraduate outcomes and borrowers need solutions. Today, let’s discuss what you need to know to tackle your student loan debt.

Know Your Student Loan Debt

Do you know how much student loan debt you have? If not, this is the very first step you need to take when working on paying off your loans. You have to know what you’ve gotten yourself into to create a strategy to get out of debt.

If you know who your lender is, you more than likely can go to their website and sign up for an account where all the information regarding your student loans are located. If you have loans at multiple lenders, you can visit the National Student Loan Data System. Regardless of how many lenders you have, this database contains student loan information from schools, the Direct Loan Program, and Department of Education Programs.

After you’ve gathered your loan information, you can use it to determine the total cost of your debt. Figure out the minimum monthly payment for each loan, the interest rate, the types of loans you have, and the payoff date. Once you know this information, you can determine if your current repayment plan will be effective in helping you pay back your loan.

Your Repayment Options

Standard Repayment – The most common repayment plan is the standard repayment program. This is for Direct and/or Federal Subsidized and Unsubsidized loans, PLUS loans, and consolidated loans. Payment amounts are fixed and span a ten-year repayment period, up to 30 years for consolidated loans. Under this plan, you will pay the least amount in interest over time.

Graduate Repayment – This repayment plan is for Direct and/or Federal Subsidized and Unsubsidized loans, Plus loans, and consolidated loans. Payment amounts are lower initially and gradually increase. Payments are made over the course of a ten-year repayment period, up to 30 years for consolidated loans. With this repayment option, you will pay more over the life of the loan than you would under the standard repayment plan.

Extended Repayment – This plan is for Direct and/or Federal Subsidized and Unsubsidized loans, PLUS loans, and consolidated loans. You can choose either standard or graduated repayment options for a repayment term of up to 25 years. With this option your payment will be lower; however, you will pay more in interest than you would under a standard repayment. To qualify you must have more than $30,000 in Direct loans or FFEL (Federal Family Education Loan)

Income-Driven Repayment – In addition to these repayment plans, there are other payment options for individuals with income sensitivities. These four plans are Revised Pay as You Earn (REPAYE), Pay as You Earn (PAYE), Income Based Repayment, and Income Contingent Repayment. These plans were created to make payments more manageable through reduced payments determined by your income. If you have federal loans and want to use one of these options, you must apply for consideration.

For information on income sensitive repayment options available to you, visit Federal Student Aid. You will find information on how student loan payments are calculated under each plan, plan requirements, and other resources to determine if these plans are right for you.

Consolidate or Refinance Your Loans


If you have more than one student loan provider or you want your loans to have one single, low-interest rate — you may want to consider consolidation. A direct loan consolidation allows you to combine multiple federal loans into one loan. This will give you one single payment to focus on instead of paying multiple lenders different amounts.

Most consolidations will lower your monthly payment, can extend your repayment up to 30 years, gives you other repayment options, and changes your interest rate from a variable to fixed rate. With these benefits, you risk losing some benefits offered by your original lender such as loan cancellation benefits, principal rebates, or interest rate discounts. Also, by extending the life of your loan, you will pay more in interest.


If you can comfortably afford a standard or graduated repayment plan, you might also consider student loan refinancing. You can refinance your federally owned and other private student loans into one private student loan with a low-interest rate. You have the option to extend your repayment period and lower your monthly payment or you can refinance into repayment terms as short as five years.

There are a few things to consider before refinancing your student loans. Consider how much money you would actually be saving. If you want to pay off your loans quickly as possible to reduce the amount of interest paid, this option may be attractive to you.

You can only refinance student loans with private companies. You may have seen ads for SoFi during March Madness or during the Super Bowl. SoFi is one of the larger banks offering student loan refinancing. Make sure that you do your research before refinancing.

Here is an in-depth resource ranking popular banks offering refinancing.

If you think you may need to utilize any federal repayment options in the future such as income-based repayment plans, you may want to reconsider. When you refinance, you lose these types of repayment options along with student loan forgiveness programs offered by the federal government.


If you already know that you want to refinance your student loans, I recommend checking out LendEdu to answer a 3-minute questionnaire. There you can compare competitive interest rates for up to 12 different lenders.

Consider Payoff Strategies

Debt Avalanche

If you choose to use the debt avalanche repayment strategy, you would make the minimum payment on your student loans. Any additional payment you gather for the month would be used to contribute to loans with the highest interest rate. The idea here is to pay off the most expensive debt first.

For example, let’s say you have a student loan in the amount of $2,000 with a minimum monthly payment of $80.00. This loan has a 6.8 percent interest rate. Your second student loan is $1,300 with a minimum payment of $50 and an interest rate of 6.0 percent.

This example would give you a combined monthly minimum student loan payment of $130. If you had an additional $100 to contribute towards your student loan, you would contribute this amount to the $2,000 student loan because of the higher interest rate.

Debt Snowball

Using the debt snowball strategy, you would list all of your student loans from smallest to largest. Any extra funds you have to contribute to your student loans for the month would go towards the loan with the smallest balance. The logic here is to give the illusion of a bigger win by paying off a smaller loan quickly, despite whether it has a higher interest rate.

Using the same example as we did previously for the debt avalanche method, let’s say you have $2,000 at 6.8 percent, $1,000 at 6.0 percent, and an additional loan of $3,000 at 6.8 percent. You would list each loan as $1,000 (6.0 percent), $2,000 (6.8 percent), and $3,000 (6.8 percent).

You would make the minimum monthly payment which would be $230. Any additional payment would be directed towards the $1,000 student loan because of the smaller balance, not the smaller interest rate.

Regardless of which debt repayment strategy you use, it’s important to understand how your interest rate is calculated and how your payments are applied. Contact your loan provider to gather this information so you can create a strategy that will help you pay down your principle balance. Some lenders will put all money towards interest owed first, so it’s important to be aware of when interest is added to your balance so any additional payments will help you get out of debt faster.

Increase Your Income

If you want to accelerate your student loan payoff, you might have to increase your income. This means you would take on additional work or work outside of your job to come up with extra money to contribute towards your student loans. I’ve written a review on the book titled Hustle Away Debt by David Carlson, where you can explore the art of side-hustling and determine if it’s right for you.

To accelerate my student loan payoff, I take on freelance writing projects in addition to my full-time income. My other online side-hustles include blogging, taking surveys, user website testing, and blog commenting. As I continue to grow my online presence, I may consider other ways of increasing my online income to help pay off my $80,000 student loan balance.

Click here to read my review on Hustle Away Debt if you’re interested in hustling your way out of student loan debt..

Other Things to Consider When Paying Student Loan

Emergency Fund

I’ve written a detailed post titled, Emergency Funds 101: What You Need to Know. This article focuses on the importance of an emergency fund and why you need one even when you’re paying down debt. I won’t reiterate everything, but it is important to note that you should save up a minimum of $1,000 while paying down your student loans.


If you haven’t already, you need to create a budget. Your budget is going to be the single most important tool in helping you pay off your student loan balance. I’ve written a post titled Budgets: A Quick, Easy, and Simple Method for Beginners. This post will provide you with all the information you need to help you get started.

Once you’ve set your budget up, you will be able to automate your expenses and savings. Many student loan carriers offer interest rate deductions if you sign up for automatic payment. Not only does this save you money on interest, it helps prevent late fees associated with forgetting to pay your monthly payment on time.

Consider Volunteering or Forgiveness Programs

AmeriCorp offers a stipend of $7,400 and a contribution of $4,725 to be used towards your student loans if you serve for 12 months.

PeaceCorp volunteers participate for two years and may apply for deferment of Stafford, Perkins, and Consolidation loans. You could also receive partial cancellation of 15 percent for each year of service (up to 70 percent) for the Perkins loans.

Volunteers in Service to America receive $4,725 for their student loans for 1,700 hours worth of service.

Other forgiveness programs are provided for teachers, nurses, attorneys, military personnel, and other individuals employed in public service roles.

In conclusion

The most important thing you can do when it comes to tackling your student loans debt is becoming educated on your repayment options. You need to know how much you owe, how long it will take you to get out of debt, and how much it will cost. Consider all implications before making decisions on how to proceed with paying off your student loans. The decision you make has the potential to be the most expensive financial decision you make or the smartest financial decision you make. Don’t be overwhelmed with the process. Just know the facts and do your homework. Once you’ve done this, you can create the perfect strategy that will help you get out of debt faster.


Do you have student loan debt? How are you tackling your student loan repayment?

 Are you overwhelmed by your student loan debt? If so, let's get you headed on the right track. Here's a guide on how to tackle your student loan debt so you can pursue more important things and reclaim your financial freedom.

Latoya Scott
CFEI/Social Entrepreneur
Latoya Scott is a Certified Financial Education Instructor and personal finance writer with a mission to help millennials learn how to stop living paycheck to paycheck so they can become financially carefree.

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  • Holly@ClubThrifty April 11, 2016 at 10:33 am

    We no longer have student loan debt but we did have around $21,000 when we got married. We made minimum payments of around $150 for several years before we got serious about it and paid it all off. I’m glad it’s behind us, because paying it off helped us move on to bigger and better things!
    Holly@ClubThrifty recently posted…Jamaican Vacation Recap and Top Credit Card Picks for April 2016My Profile

    • Latoya S April 12, 2016 at 11:19 pm

      Hey Holly! I know that’s right. I can’t wait to get to those bigger and better things!

  • Terri April 11, 2016 at 1:42 pm

    Love how you broke this down. I’m currently on an aggressive debt repayment journey. I’ve been following the snowball method and the motivation from paying off those smaller loans is an amazing feeling. My goal is to be completely debt free in 3 years.
    Terri recently posted…How to Go From Just Anything to Something SpecialMy Profile

    • Latoya S April 12, 2016 at 11:20 pm

      Thank you, Terri!

      That’s awesome! I hope you document your journey on your site. I’ll definitely make sure to keep updated and I’m sure you’ll meet your goal with a little time to spare:)

  • Aliyyah @RichAndHappyBlog April 11, 2016 at 4:22 pm

    Great breakdown of the different ways to pay down student loans. Regarding budgeting, this is my first month tracking my expenses dollar-for-dollar. I am using a Google spreadsheet. I’m hoping this will give me better insight on where I can minimize spending.
    Aliyyah @RichAndHappyBlog recently posted…How Having A Cat Can Improve Your Life In Your 20’sMy Profile

    • Latoya S April 12, 2016 at 11:22 pm

      Hi Aliyyah,

      That’s a great idea! I used to carry around a notebook in my purse and notate every single thing I spent money on until I got control of my spending. Needless to say, once I stopped, my habits got out of control again. I’ve been thinking about picking it back up again so I can control our food budget a little more. It definitely helps!

  • Amanda S @ Passionately Simple Life April 11, 2016 at 8:43 pm

    Yes! Student loan debt is around 18.5k for me. And yet it’s down from the around 36k from about 3 or 4 years ago. It hasn’t been easy but using a combo of all the methods you mentioned has really made a difference. No matter how high the balance I truly believe that if someone wants to they can dig themselves out of whatever hole they are in.
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    • Latoya S April 12, 2016 at 11:23 pm

      Hi Amanda, that is definitely true. Congrats on paying down so much debt. You’re killing it!

  • DC @ Young Adult Money April 12, 2016 at 12:52 am

    This is such a great roundup of all the options available to people. I greatly appreciate you mentioning my book, and I think it’s wonderful that you mentioned all the options BEFORE side hustling. Side hustling doesn’t have to be the first thing you do to tackle student loans. If you’re really struggling week-to-week it’s best to free up cash flow through income-based repayment or some of the other options you mentioned. It’s easier to side hustle with a little breathing room!
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    • Latoya S April 12, 2016 at 11:24 pm

      Hi David,

      You’re welcome. And yes, it is easier to focus on things better once you’ve gotten that little bit of breathing room. Once the minimum is met and your needs are taken care of, it’s easier to focus on aggressive debt repayment strategies.

  • Chonce April 12, 2016 at 5:17 pm

    I’m definitely a big fan of the avalanche method because I want to avoid paying as much interest as possible. Side hustling and budgeting have both really helped me make a lot of progress on my student loan repayment and I’m hoping to get rid of them by next year so I can put it behind me.
    Chonce recently posted…Frugal Wedding Series: How to Throw a Last Minute Bridal Shower on a BudgetMy Profile

    • Latoya S April 12, 2016 at 11:25 pm

      Hey Chonce,

      I’ll be here cheering you on when you make that last student loan payment!

  • Frank Facts April 13, 2016 at 10:09 am

    Public Service Loan Repayment is a good option for some people. Anyone in public service (and, I believe, teaching) can get it, but it doesn’t kick in until you’ve made 10 years of on-time payments. And frankly, that’s a lot of paying! I’d be interested to see the calculation of how much interest is actually paid in that 10 year period — I wonder if the repayment of the remainder at the 10 year point is actually overall less financially advantageous than just paying it off early, because of the accumulated interest.
    Frank Facts recently posted…Emergency Fund Planning: What Is The Probability You’ll Need Your EF?My Profile

    • Latoya Scott April 14, 2016 at 11:05 am

      Hi Frank,

      You do bring up a great point. My friend is an attorney and is actually having a portion of her student debt forgiven. I guess it would depend on how much that person could reasonably afford. The sad fact is that many borrowers don’t know about many other options and only consider their take home pay from their jobs when paying off their student loans. I believe if side-hustling efforts were widely promoted as much as the dire condition of student loan debt overall, we might be able to present a better message to others on how to effectively pay down debt in the shortest period of time. A lot of people graduate and feel their only option is to work and pay those monthly payments and if those payments aren’t reasonable they fall back on income-based repayment options if they are allowed given their circumstances. For those who can have their loans forgiven after ten years, to them that’s better than nothing and they more than likely arent taking a look at the bigger picture of overall interest being paid.

  • Don Capouch April 13, 2016 at 10:10 pm

    Hey, Latoya! This is the second post/article I’ve read lf yours, and I’ve been very impressed so far. I’m all about getting a message like this out. My fiancée and I started out with about $70k in debt 2 years ago, and now we’re down to around $57.2k after getting serious late last year. We plan on paying off over half of that this year hopefully ($2500/month). Good luck on your debt journey! I’ll be back to read more for sure.

    • Latoya Scott April 14, 2016 at 11:01 am

      Hi Don, thank you! Glad you enjoy being here! And woo hoo!!!!! Congrats on making such incredible progress with your student loans! That is remarkable!

  • Alexis @ Fitnancials April 14, 2016 at 8:18 am

    I’m still in college and debating on how I will pay and what my options are after I graduate. I’ve thought about starting the payments now to decrease the interest, but I’m not sure if it’s the smartest route for me.

    • Latoya Scott April 14, 2016 at 11:00 am

      Hi Alexis,

      I would consider my overall financial picture. Do you have any high-interest credit cards or other personal loans that need to be tackled? I would couple those thoughts with any short term and long term financial goals such as moving, living arrangements, etc.

      Paying on interest while in college might not seem like much but it can make an incredible impact on how much you owe after graduation. If I could do it again I would certainly have done it.

  • Latasha @ Arts and Budgets April 21, 2016 at 12:17 pm


    Great Post! 🙂 I love how you broke it all down! I am currently paying down my student loans as well and totally wish there were more forgiveness options available.
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    • Latoya Scott April 22, 2016 at 8:52 pm

      Hey Latasha,

      Wouldn’t it be nice? It’s good to dream though, keeps us focused on the end result:)

  • Selene February 9, 2017 at 6:26 pm

    Love your post! Definitely some great tips and advice. Thanks for sharing!

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