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Advice for Handling Student Debt

Student loan debt is one of the greatest crises facing people today. Although you can't immediately get rid of all your debt, here are a few simple ways to gradually reduce the amount you owe to zero.

For every one second, student debt increases by about $2,858.

It’s no wonder that the total U.S. student debt is now over $1.4 trillion in the United States, with an average debt of about $38,000. The student debt issue has hit crisis levels, and individuals need a strategy for dealing with this kind of debt before they fall behind without a chance to recover.

But handling student debt can be more complicated than promising yourself that you’ll put more away. Here are some realistic ways you can handle student debt, pay it off early, and incorporate an ambitious payment plan in your post-collegiate life to make your life easier.

Realize how important your student debt is

It’s understandable that so many former students — saddled with tens of thousands of dollars of student loan debt — want to move on with their lives. They want to buy a home, invest for retirement, and begin looking at stock. Relative to these other potential investments, many people believe that there are better investments available than paying off pre-existing debts.

Nevertheless, eliminating your student loan debt can be among the best investment decisions you ever make.

What you have to do is calculate the expected returns of most investments. For example, a student loan with a 6.8 percent interest rate means that if you pay extra money toward that loan, you’ll realize long-term savings on that interest that’s both strong and guaranteed. That means any extra money you put toward your student loans then becomes among the best sure investments you can ever make.


Ask most investors if they would take a 6.8 percent guaranteed rate of return and they’ll likely ask you where to sign up. Reframe your student loans as an investment of this caliber, and you’ll realize the importance of paying them off early.

Tips for paying off student debt

Once you know how important it is to pay off student debt, it’s time to think about the practicalities of making student debt disappear. Here are a few tips:

  • Create an automatic payment plan as soon as you land your first paycheck. Why so soon? Because it’s important to get accustomed to your current level of income. If you earn $3,000 per month, an extra $50 per month toward student loans won’t have the same impact if you’ve always been making that payment throughout the life of your current income.
  • Run a student loan payment calculator. Make sure you use this information to inform how much extra money you want to put aside per month. It will give you an accurate picture of your current situation and help you establish a realistic goal for setting extra money aside.
  • Use tax advantages and deductions when possible. Those tax deductions are there for a reason; they’re there to help you handle your student loan debt even if you don’t have a substantial income. Review the Student Loan Interest Tax Deduction to better understand what your tax burden will look like going forward.
  • Remain wary of some repayment plans. When you’re searching around for ways to reduce your student loan payment, you might find yourself tempted to stretch a student loan for the long term so you have more breathing room in the short term. Be wary of this. Plans such as an income-based repayment plan can actually hurt you in the long run. Even though they give you more short-term wiggle room, review these plans thoroughly to make sure you’re not paying too much interest over the long term. And the longer a repayment takes, the more interest you can expect to pay.

Advice for handling the challenges of post-college life

After college, you have a lot thrown at you. You’re not only entering the real world of personal finance, but also doing it saddled with student loan debt.

But being “saddled” with something doesn’t have to mean that you allow yourself to be ruled by it. Instead, take a proactive approach. Decide that you’re going to attack your student loan debt with purpose and find simple ways to increase your cast.

From finding extra money from part-time work or redeeming your savings from cash back credit cards,  you can always find more wiggle room in the budget to put money toward your student loan debt. And if you make this process automatic, you’ll notice it even less. That means you’ll have less money to spend now, but it will save you money on interest payments in the future. And when you finally do arrive at that time when student loans are no longer on your budget, you’ll feel the income boost immediately.

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