Your New Year's Plan to Paying Off Student Loan Debt

By Tamiera Vandegrift on December 23, 2016

The New Year is coming soon and many of us are thinking about the resolutions we can make. One great resolution to add to the list is figuring out a plan to pay back your student loan debt.

Yes, student loan debt, the three most despicable words to a college student’s ears. It’s a pretty common belief that students don’t have to worry about paying back their loans until after they have already graduated. While this is true, depending on the type of loan, a wiser decision would be to start planning a way to pay back student loan debt earlier so that it doesn’t become a burden later on in life. This year, you’ll have a plan to graduate with less debt and that’s a holiday gift that will keep on giving.

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Don’t borrow more than you need.

Loans can come in all shapes and sizes, but some of them can actually be too large for comfort. It might seem like bigger is better and though you’ll always have the use for extra money, it’s important to remember that student loan money is exactly that: loaned money. Whatever you borrow, you’ll have to pay back and most likely with interest!

Calculate the exact amount of money you’ll need to cover your tuition, housing, meal plan and books. Subtract whatever financial aid you already have from this amount and you’ll have the amount of money that you should take out in student loans. Anything else is extraneous and will only add more debt to your plate than necessary!

Get to know your loan servicer.

Don’t be shy! Your loan servicer is there to answer any questions you might have, address your concerns, and they’re only a phone call or email away. Contact them to find out the details of your loans. They’ll be able to help you arrange a repayment plan to knock out your student loan debt that fits your income needs. They’ll also be the ones to accept your payments when it comes time for you to begin paying back your student loan debt. It would be a good plan to maintain contact with them early on in order to make the repayment process as quick and painless as possible. In fact, they might be able to educate you on ways where you can begin eliminating debt now.

Be frugal.

Not having regular bills to pay or many financial responsibilities makes it easy to blow your money as a college student and to live outside of your means. After all, have you ever been afraid to look in your bank account after a long weekend? This year, it’s time to buckle down and start becoming a bit more frugal.

Cook your meals rather than eating out. Walk or take public transit rather than driving. Identifying ways to cut the money you spend will allow you to allocate more free money that you’ll be able to use to pay off more important things, such as your student loan debt.

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Look for extra cash.

Most universities offer work-study programs that give you the ability to work off your college costs while you attend school. This grants you the opportunity to take out less loans and graduate with less student loan debt in the end all at the cost of a little bit of your free time.

If you aren’t eligible for work-study or aren’t able to hold a part-time job during school, it might be time to begin consulting your piggy bank. Instead of spending your holiday gift money, consider putting it towards paying off your student loan debt. There are also plenty of opportunities on campus to earn extra cash. Some universities hold social experiments where students are paid to participate in activities for research. Check out your university’s website to see what other opportunities they might offer.

Try your hand at being your own source of income by freelancing. If you’re artistic, check out Etsy and learn how you can turn your arts and crafts into cash. If you’re a writer, check out the freelance writing world. There are a variety of ways that you can turn your hobbies into income!

Search for alternatives to loans.

While loans are the easiest way to accrue money for college, they are definitely not the cheapest. Scholarships and grants are free money and worth every extra coat of elbow grease. Websites like Fastweb and Scholarships offer access to millions of scholarships for everyone, not just honors students and athletes. There is a scholarship out there for everyone and it’s up to you to catch ‘em all like Pokemon (too corny?).

The best way to become eligible for more free financial aid is to study hard and keep your grades as high as possible. Scholarships and grants are looking for students to invest their time and money in. Show them why you deserve their funding more than any other students. By doing so, you’ll save yourself from more student loan debt in the end.

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Pay off interest.

It might seem a bit unrealistic to start tackling monthly payments while you’re still in school and if that’s the case, that’s perfectly okay especially because they’re typically deferred until after you graduate. While your monthly payments are a bit too steep to handle, the New Year can still be time to hack away at your student loan debt by paying off your interest first.

Ask your loan servicer if it would be possible to pay off your interest while you’re still taking classes. If it’s possible, you’ll be able to reduce a significant amount of your student loan debt by the time you graduate.

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