Six Strategies for Managing Student Loan Debt

The total amount of outstanding student loans in the U.S. nearly doubled between the first quarters of 2011 and 2021.¹

Student loan debt can impact many aspects of your financial life, from employment decisions, day-to-day living choices, major purchases, and the ability to save for retirement. If not managed properly, onerous student loan debt can contribute to financial stress and physical health problems.

Student loan repayments usually start before most graduates have been able to build a solid financial cushion. Developing a plan to manage your student loans early on is critical to your long term financial health. Here are some strategies to help:

1. Know what you owe. Take time to determine and keep track of the lender, balance, and repayment status for each of your student loans.
2. Understand your repayment options. There are a variety of ways to repay your student loans. Your optimal repayment plan will depend on the amount of debt you owe, your financial situation, and your long term financial goals.
3. Pay your loans automatically. Schedule automatic loan payments from your bank account. You won’t have to worry about paying late and damaging your credit score. Some lenders, like our partner, Laurel Road, offer a rate discount when you make automatic monthly payments.
4. Apply ‘found money’ to loan balances. If you get a salary increase or bonus, a tax refund, or a cash gift, consider allocating a portion—or all of it—of it to your loan repayment.
5. Research employer benefits. Some companies help pay off student loans as an employee benefit. Find out if your company offers an employer student loan repayment program. If yours does, be sure to enroll. If you work for the government or as a teacher, Public Service Loan Forgiveness may be an option for you.
6. Periodically reassess your repayment plan. If you have a decent credit score and a steady income, consider refinancing your student loans. Refinancing lets you adjust your term or secure a lower interest rate, freeing up more money to put towards your long term financial goals.

¹Federal Reserve Bank, June 2021: https://fred.stlouisfed.org/series/SLOAS.
²NerdWallet Harris Poll, July 2021: https://www.nerdwallet.com/article/loans/student-loans/student-loan-debt-spans-generations-and-many-arent-ready-to-resume-payment