How To Pay Off Student Loans

The college experience is a much different beast than it was even thirty years ago. Or heck, even a few years ago. There was a time you could work for a summer and pay for an entire year of school, and now it seems that many graduates are paying off student debt into their thirties and forties, at least. This makes it a huge commitment, especially for newly-minted adults who don't have much experience with loans and debt.

If you're struggling with student loan debt, take some comfort in knowing you're not alone. And don't get too concerned just yet—if you're struggling with student loans, there are ways to make the process easier and more manageable.

Why Are Student Loans So Hard to Pay Off?

There are a number of reasons student loans have such a large, uneasy impact on today's students and graduates. An estimated 43.2 million people have student debt at an average of about $39,000, that's one in four American adults. In some states, this is as much as a starting mortgage, which can be a 30-year commitment. Pair this with the fact that the median household income is about $67,000, and you can see why people are concerned.

Student debt often has long repayment terms, high interest rates, and is tough to shake—even due to financial hardship. This means that once you graduate, you're stuck with your loans, regardless of what happens post-college.

How Much Student Loan Debt Can You Expect?

Student loan debt can vary widely depending on where you go to college, what type of housing you have, how many years you spend in school, and even what type of loan you have. For example, if you live in off-campus accommodations or have in-state tuition, you could shave tens of thousands of dollars off your total college bill. Especially if you choose to rent or live with family while you're in school—you can shave off a lot of debt by paying for housing in real-time.

If you have a four-year degree with a modest $25,000 tuition, you can expect a debt of $100,000, while going to an ivy league could cost you as much as $80,000 a year for a total of $320,000. You may also find that getting your associate's degree first at a community college could be as little as $3,500, giving you more leeway to finish your bachelor's degree elsewhere.

In short, college can be highly adaptable, and the amount of debt you accrue depends on…

• Whether you attend a public or private college
• The Ivy League status of your school
• Your housing situation, and whether you live on campus or off
• Scholarships, grants, and other aid
• How much of your own money you contribute
• Whether you complete college credits through AP courses, dual credit, etc.
• How quickly you graduate

Will Student Loans Be Forgiven?

As of right now, it depends. Instead of opting for widespread student debt cancellation, the Biden administration is currently rolling out targeted forgiveness programs. This means that certain sectors of those with student debt are getting priority relief. Currently, the administration is canceling debt for at least 30,000 borrowers working in public service. 

If you do not qualify for this round of cancellation, don't get discouraged. The best course of action for the moment is to plan for loan repayment to be unpaused in 2022. So if you have had your loan repayment frozen, prepare to begin paying again. Knowing how much you owe and when can help keep you from making late payments. Then, you can make more concrete plans to make your debt more manageable. In the future, the Biden administration may roll out new initiatives for debt forgiveness.

How Do You Make Student Loans Less Scary?

If you aren't eligible for loan forgiveness and you're worried about the student loan forbearance ending, just know that you have other options. First, identify what part of your loan is most intimidating—is it the amount of money you're paying each month, the interest rate, or the length of your repayment? Identifying which is most intimidating can help you choose the best strategy for you personally—whatever helps you sleep better at night.

Refinance Your Loans

Refinancing your loans can actually help with each of the three intimidating pieces of student debt. Refinancing essentially means a company assumes your debt in order to make it more manageable for you to repay. Often, when you refinance, you can either lower your interest rate, lower the repayment time frame, or lower your monthly payment. In some cases, you can do two of those things.

Say you are primed to repay your loans over ten years, but the monthly payment is hurting you. If you refinance, you're likely to take on a longer repayment term, which may even increase your interest payment, but you get to pay less each month. If you're most concerned with affording your bills in the present, this can be a great option. And as your income increases, you can apply more money to your repayment to shave off time and interest once you're able. You could even refinance again to try for a lower interest rate.

Consolidate Your Loans

Consolidating your loans may help you reduce your overall interest and even your repayment timeframe or monthly payment. Consolidating your debt is ideal when you have multiple loans and lenders, as one lender buys all of your debt and consolidates it into one loan. A single loan can streamline everything, and keep you from paying different interest rates, over different time frames, on different dates. Just make sure that you make out better than you would otherwise when you consolidate.

Additional Payments

You may find that your biggest concern about student debt is how long you will have it. Many people fear paying loans into their forties and beyond, for good reason. Sometimes, simply making additional payments can contribute to your overall peace of mind. Whether you add $100 as you're able or save up and pay in a lump sum, you may be able to shave off a lot of extra time and interest costs.

Make Your Loans Work for Your Lifestyle

Student loans can take over a massive part of your adult life, which often makes them feel impossible to pay down. They can feel overwhelming and hard to get rid of, which is a lot to handle when you're fresh out of school. Having a plan makes everything significantly more manageable and can release a lot of the pressure.

If you're ready to start setting your own loan repayment goals, an app like Monorail can help you get started.

See how it works.

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