8 Ways to Ease the Student Loan Burden

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Student-loan-burden A friend of mine just graduated from business school with six-figure loans totaling just over $1,000 in monthly payments. That’s more than his car loan, more than his rent, more than his monthly Visa bill.

At present, student loan debt has eclipsed credit card debt. According to a Wall Street Journal report, outstanding student loans – both private and public – amount to nearly $830 million. The report cites Mark Kantrowitz, the publisher of and
As a borrower, if you fall into that category, there’s no doubt that you may need help, fast.

Consider this advice:

Pay Down the Principal. The best way to get out of any kind of debt quickly is to pay it off aggressively and chop down the principal. When you boost income (which I’ll discuss how below) or get a lump sum of cash for your birthday or year-end bonus, pre-commit to putting at least 50% of that windfall toward your debt. Make sure you direct that extra payment toward the principal, not the interest (a common mistake).

Stay the Course. If you can only afford the minimum payment, don’t worry. More importantly, don’t ever miss a student loan payment since there is no statute of limitations on how far lenders can go to retrieve your payments, including garnishing your wages or taking money out of your tax returns. This can also put a big dent in your credit score and credit report.

Peg Payment to Income. If you have federal student loans, you may qualify for Income-Based Repayment (IBR), a program that helps borrowers cap their loan payments based on their income and family size. For most qualifying borrowers, IBR loan payments will amount to less than 10% of their income. The program will also forgive any remaining student loan debt after 25 years of making payments.

Work in Public Service. The Department of Education has also begun a program called Public Service Loan Forgiveness (PSLF), again, strictly for federal loan borrowers. If you work full-time for a “public service” employer such as a non-profit, AmeriCorps, PeaceCorps, the military or a government agency, PLSF may forgive your remaining debt after 10 years of employment and making on-time payments. During this time the IBR plan can help make your loan payments affordable.

Get a Gig. If you can’t get a raise at work, try to boost your income outside your 9 to 5 with part-time or freelance work, like child care, pet sitting, adult care, home care and tutoring (try or to online technical work (visit and to selling goods online (visit, and Take it from me: I babysat, bird-sat and wrote freelance articles while working a full-time job out of graduate school, which helped me pay down my student loans in 3 years, instead of 10.

Shorten the Term. See if the bank will reduce the term or repayment period on your student loan. You’ll get out of debt faster but, of course, you’ll need to shore up more money each month. Or talk to your lender to see if there’s an alternative program that can help you keep your head above water temporarily.

Deduct It. You can deduct up to $2,500 in student loan interest from your taxable income and any savings you make can go toward paying down your debt.

Transfer Debt to a Personal Loan. If you get an offer to open a private loan with a lower rate than your existing student loan, consider transferring the debt. This is easier said than done (which is why it’s my last tip). Transferring debt to a loan product with a lower rate will lower your monthly minimums but you’ll need superb credit to qualify. But don’t fall into the trap of paying the lower monthly minimum or you may stretch the life of the loan for several more years, paying more interest in the long run. Psychologically this may not be the best solution for some folks.

Farnoosh Torabi – Personal Finance Contributor, nationally recognized author, expert and television host. Her first book, You're So Money, is an acclaimed tell-all for young adults searching for financial independence. Her new book Psych Yourself Rich, gives readers the mindset and discipline to build their financial life.

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  • bob gainey

    Help!!! My paycheck has been hit by the collection agency for my student loans.

    They will not work with me. the IRS says I should be paying only around 96.00 per month.

    Is there any advice you can give me to help. I only make 12.00 per hr. This is only adding stess to my outlook. Iam 60 y.o. what should i do.

  • Pingback: Student Loan Defaults Spike

  • Nico

    Student load debt is nowadays an imense burden! And student loans don’t have an expiry date!

  • Jeff gilland

    My student loans are in default,need to find a lender to help me consolidate…. Killing my credit score

  • Lumpie

    My student loans are now down to 1300. I am glad about that, but it cost me my taxes since 1998. But I just going to let them take it for the last time next year, because this time they will be sending me the rest of my taxes. AND THAT’S HOW MY LOAN WAS PAID OFF!!!!!

  • Emma

    I have a student loan that I have been trying to get some help on for the past few years. I became totally disabled in 2003, and the government has been taking our tax refund since then. My problem is this. The School that I attended, was closed before I got a chance to finish my classes. My Student Status says that I graduated, but the Dept of Education and the Collection Agency both say I withdrew from class 90 days prior. Which is not true. I went to school as normal and the building was padlocked. I don’t feel I should have to struggle with this bill and worry about my health at the same time. I just got out of the Hospital after being there for 2 months due to my health problems and the bill collectors still call me is there any place I can go to get help

    • Renee

      I believe that all your debts are forgiven if you got permanently disabled. Please talk to your loan servicer.

      Hope this helps.

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