Graduation is a time of celebration. You’ve finished four (okay, maybe five) years of school, and you’re ready to conquer the world. Do you know what else you should be ready to conquer? Your student loan debt.
In 2024, the total amount of student loan debt in the U.S. was at an all-time high at more than $1.7 trillion. Spread over 42 million borrowers, you can take comfort in the fact that you’re not alone. While the idea of repaying your debt may be overwhelming and a seemingly impossible feat, take heed. We’ve got a few words of wisdom that can help you get started. With some self-discipline and a little sacrifice, you’ll be able to wipe out that I.O.U. sooner than you think.
Here are some practical strategies you can use to get your finances in order, knock down that debt, and be well on your way to financial freedom:
1. Live like a college student
You’re eager to venture out into the real world and live on your own. You want to rent a cool apartment that doesn’t include a hand-me-down couch and four other roommates. We get it. But if you can stand it, try not to inflate your current lifestyle too quickly. By keeping the same penny-pinching habits you used in college, you’ll be able to send a bigger chunk of your paycheck to your lender. The quicker you pay it down, the faster you’ll graduate to a more comfortable lifestyle that doesn’t include a repayment plan.
2. Send more than the minimum payment
If you continue to send the required minimum loan repayment each month, it’ll take the full term of your loan to pay it off. You’ll also wind up paying the maximum amount of interest. Consistently sending more than your $50 minimum payment, for example, will not only help you pay the balance down more quickly, it’ll significantly reduce the total amount of interest you pay over the term of the loan. Increasing your payment by any amount will save you both time and money, and who wouldn’t want that?
3. Pick up a side hustle
If you need more money, find a way to bring in additional income. Maybe you DJ on the weekends, wait tables at night, or work as a freelance photographer. Whatever your talent, parlay it into a side hustle. The key here is to have enough discipline to take the extra income and pay down your student loans. It’s not a way to save for a vacation, to buy a new car, or that designer bag—right now, anyway. If your objective is to tackle your student loans, keep your eye on the prize!
4. Send extra payments
Did you get a tax refund, a bonus at work, a little extra cash in your birthday card? It might not be the most exciting thing to do, but paying down your loan with a windfall, no matter how big or small, is the financially smart thing to do. Making extra payments, whether it’s each month, every quarter, or whenever you happen upon some extra cash, will speed up your loan repayment and reduce your total interest expense. The faster you pay it down, the more money you save, and the quicker you get out from underneath that student loan debt.
5. Add loan repayments to your gift wish list
How many Starbucks gift cards do you really need? When friends and family ask you for birthday or holiday gift suggestions, you might tactfully ask them for a cash gift to pay down your student loan balance. If a loved one wants to help, they can make a direct contribution to your student loan debt if they’re a co-signer or by being granted third-party access. It takes a few extra steps, but borrowers can grant someone third-party access by contacting their loan servicer and filling out a form identifying who they want to have access. You can find more information on your loan servicer’s website on how to fill out the form or if they offer that feature in the first place. If the gift-giver doesn’t have third-party access to your loan or isn’t a co-signer, the easiest way to receive those funds is through cash or check. It’ll take some self-discipline on your part, but it’s a practical and useful gift that you’ll appreciate for years to come.
6. Refinance your student loans
Consolidating and refinancing your student loans at a lower rate can help you reduce the amount of interest you’ll pay. It may also allow for a shorter repayment term and a quicker route to becoming debt free. With one loan, one monthly payment, and a more competitive interest rate, it’s worth a look. There’s no harm in evaluating your options, especially when there may be an opportunity to save some cash and reduce your debt more quickly.
7. Look for employers who can help
More and more people in the workforce today have some amount of student loan debt—and employers know that. One way that organizations attract and retain employees is by offering some form of student loan repayment benefits. Some common student loan repayment benefits include:
- Contributions to employees’ student loans: If an organization offers an educational assistance program, employer contributions up to $5,250 annually are income-tax free for employees through December 31, 2025.
- Match contributions to retirement accounts when employees make student loan payments: Some employers match contributions to your retirement account when you make a student loan debt payment. Employees can work toward paying off student loan debt and simultaneously receive their employer retirement match, even if they’re not making direct contributions to their 401K. The SECURE Act 2.0, implemented in 2024, lets employers treat employees’ qualified student loan debt payments as if they were 401K contributions for matching purposes.
- Personalized student loan counseling: Some employers offer personalized student loan counseling to help their employees navigate the many federal repayment plan and forgiveness options available.
There are other similar programs, too. Government employees may be eligible for the federal government’s Student Loan Repayment Program. Nurses and teachers may be eligible for the Nursing Education Loan Repayment Program and Teach for America, and public sector employees may be able to receive assistance through the Public Service Loan Forgiveness Program.
Bottom line
Being weighted down with student loan debt isn’t the ideal way you’d like to begin this next chapter of your life, but it’s a reality for most college students. You can make the minimum payments, repay your loans as scheduled, and live happily in the process. But, if you’re anxious to finish those monthly payments and begin investing in your future, use these strategies and get started sooner than later.
