6 best ways to manage your student loans
Updated October 16, 2024, 2:46 AM EDT
Student loans can make paying for college easier when you don't have savings to pay out of pocket.
An estimated 43 million borrowers owe federal student loans, according to the Department of Education. Of the $1.7 trillion in outstanding student loan debt owed, private student loans account for $131.8 billion of that total.
If you have private student loans, you may want to consider refinancing your student loans while rates are low. A student loan refinance can lower monthly payments, allow you to get a better loan term, and more. Get started now.
Chances are you, too, also have student loan debt. But don't worry, there are loan repayment options and easy ways to eliminate student loan debt fast (and you don't necessarily need a financial advisor to tell you what to do).
6 ways to manage your student loans better
If you already have student loans, or you're planning to borrow to pay for school, here are six ways to make managing student debt easier.
- Shop and compare student loan lenders
- Don't borrow more money than you need
- Get to know student loan servicers
- Review your repayment options
- Consider student loan refinancing
- Make paying off debt your priority
1. Shop and compare student loan lenders
If you're applying for federal student loans using the Free Application for Federal Student Aid (FAFSA), any loans you're offered will come through the Department of Education.
It's important to shop around as not all private student loan lenders or loans are the same. When looking for private student loans, consider:
- Whether fixed interest rates or variable interest rates are a better fit
- How rates from different lenders compare
- Minimum credit score and credit history requirements
- Minimum and maximum loan limits
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2. Don't borrow more money than you need
When evaluating student loans, it's important to understand how much you need to pay for college. That includes:
- Tuition and fees
- Room and board if you're staying on campus
- Books and supplies
- Computers and other equipment
Borrow too little, and you may come up short when it's time to pay for your next semester. But borrow too much, and you may end up financially strained when it's time to repay your loans later. Establishing a realistic budget for college can help you more accurately determine how much you need to borrow.
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3. Get to know your student loan servicers
Your loan servicers are who you'll send your payments to each month. The Department of Education works with a number of federal student loan servicers, whom you can contact for information about:
- Student loan repayment
- Student loan deferments
- Student loan forbearance
If you have private student loans, your lender and loan servicer are one and the same. Knowing who your loan servicers are and how to contact them matters if you have questions about your loans or if you're having a hard time making your loan payments.
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4. Review your repayment options
Federal student loans offer multiple repayment options after graduation. You're automatically enrolled in the Standard Repayment Plan but you may prefer an income-driven repayment plan if you're just starting out in the workforce and aren't earning a lot.
An income-driven repayment plan may be required if you're interested in seeking student loan forgiveness. These plans tailor your loan payments to your income, based on your household size.
If you have private student loans, however, income-driven repayment isn't available. But your lender may offer other repayment options to fit your budget, including deferments, grace periods, and graduated payment plans.
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5. Consider student loan refinancing
You have the option to consolidate student loans borrowed through the Department of Education. While it can simplify your payments, consolidation loans won't reduce your interest rate.
Student loan refinancing, on the other hand, can help you lower your interest rate and monthly payments. Since the Federal Reserve is currently in a holding pattern of keeping the Fed Funds Rate low, now could be a good time to consider refinancing student loans.
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Keep in mind that refinancing student loans through a private lender may involve a check of your credit history and credit score. If you're new to using credit, you may need a cosigner to get approved at the best interest rates. And consider using an online student loan refinancing calculator to estimate your savings.
6. Make paying off debt your priority
Once it's time to begin repaying student loans, it's important to have a strategy for doing so.
That begins with making a budget to estimate how much you can afford to pay toward your loans each month. It can also mean looking for ways to increase your income so you have more money to apply toward your loan balances.
If you're struggling with student loan payments, get in touch with your lender or loan servicers to discuss options. For example, you may choose to consolidate federal student loans to streamline your payments.