Home > 2012 > Students

How You Can Ease the Burden of Student Loan Debt

Advertiser Disclosure Comments 13 Comments

When it comes to having massive amounts of debt, student loans are one of the biggest culprits, especially now that student loan debt has surpassed credit card debt in America. So what can you do if you find that you’re sitting under a mountain of student loan debt?

Here are a few suggestions to help you dig your way out:

1. Get a Clear Understanding of Your Student Loan “Big Picture”

The most important number, of course, is the total debt that you owe. Beyond that, though, you need to understand which type of loans you actually have. There are generally three main types of student loans:

Direct Government Loans: These are ones you borrow from the Federal government itself, and they tend to have lower interest rates than private loans. They also are sometimes subsidized, which means that government pays your interest as long as you remain in school or in a grace period.

Government-Backed Loans: Since June 30, 2010, these loans are no longer being issued. But many borrowers still carry these. Like private loans, these loans are borrowed from a private company, however unlike private loans they are backed by the federal government. Which means if you default the government will reimburse the lender. (Because of that guarantee, these loans have lower interest rates than private loans)

Private Loans: Loans borrowed from any private lender without government backing.

To find out which of these types of student loans you have, try using the National Student Loan Database, which has information on all loans. You should be able to log-in and find your loans, with information about what type of loans they are.

2. See What Federal Programs Might be Able to Help You

If you have federal student loans (and most student loan borrowers do), then you need to be aware of some crucial government programs that can help you out. One is called the Public Service Loan Forgiveness Program, and anyone who works in a qualifying government or non-profit job is eligible to apply. Under this program, if you make payments for 10 years you can have the remainder of your student loan balance forgiven. Yes, that’s right — you only need to make payments for 10 years and then it’s gone, no matter what.

Another program that helps many student loan borrowers is called the Income Based Repayment program. What this does is allows you to pay lower monthly payments based upon your net income. Usually, if you are accepted into the Income-Based Repayment plan, your payments will not be higher than 15% of your disposable income each month.

3. Make a Plan to Pay Off Your Entire Student Loan Debt

The absolute key to paying off your student loans is to make a realistic and concrete plan for how you will pay them off, month by month. In order to do this, first decide how much money you can allocate each month to your student loan payments. This number will be different for each person, but it’s important that you settle on a number that makes sense for you.

If you pick a number that’s too low, then it will take you longer to pay off your loans. But if you pick a number that is too high, you won’t be able to stick with your plan. So think about it carefully, and use your budget to determine what makes sense.

Once you have that number, decide how you need to divvy up the money to pay each of your student loan payments per month. Of course, you have to pay the minimum payments, but beyond that you should usually pay any extra money toward the loan with the highest interest payment. (There are some simple web apps that can help you do this)

4. Don’t Ignore the Problem, Even if You Can’t Pay

The worst thing you can possibly do with regard to your student loans is simply ignore them and not make any payments. You need to understand what happens if you don’t pay your student loans. Why? Because if your lender doesn’t receive any payments from you, as specified in the terms of your loan, they will first declare you delinquent and then after about 270 days they’ll consider you to be in default on the loans.

Once you’re in default, a lot of things happen — none of which are good for you. For one thing, your loans become due and payable immediately. So instead of owing a monthly amount, you owe the entire balance. And your credit score will take a big hit, not to mention you could have your federal and state tax refunds withheld.

For another thing, if you have federal loans in default, the government can sometimes garnish your wages because of your student loan status. And nobody wants to have their wages garnished.

Hopefully with all the tips provided here you’ll never get to the point where you can’t pay your student loans. If you stay diligent, inform yourself, and keep making payments every month, you will become debt free — and probably faster than you realize. Good luck!

Image: Andrew Allingham, via Flickr

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Pingback: How student loans affect credit | Find Loans Today - All about loans! Find them today! | Debt | Loans | Save money |()

  • Pingback: Your Financial Benefits » Blog Archive » How student loans affect credit()

  • Pingback: How student loans affect credit | Education QA()

  • Pingback: How student loans affect credit | Education Look()

  • http://N/A Kelly

    Depends on your loan servicer, too. When I was having trouble making payments and kept contacting my loan servicer, I was sending my information into a black hole. I never heard from anyone until I started getting dinged on my credit for being in default. I regret ever getting involved in student loans. I currently have a 6% interest rate with the government. What a mess I will have for the rest of my life with this.

  • http://wh.gov/XDhX TZ

    I too have a horrible relationship with one of my loan providers Sallie Mae. They call me and offer me ways to lessen my student loans but refuse to send me anything in writing. They call me upwards of 10 times a day and every time I tell them to send me the offers they are offering me over the phone in writing they say they cannot. I have even asked for supervisors and they still tell me they can’t send me any information on the over the phone offers until after I sign up for them and schedule the payments out. I have upwards of 150k in student loan debt because of 13.9% interest rates. I will never be able to pay them off in my lifetime. That’s why I setup a petition to the government to allow for them to be discharged in bankruptcy (http://wh.gov/XDhX). I feel like it was unfair to ask an 18 year old to sign papers that they didn’t understand. Also I was promised the world by my school and did not get anything they promised. I ended up having to go back to school to get the skills my 1st college promised me. Luckily my work paid for my 2nd degree. Unfortunately I still can’t afford the 1500$ a month payments my loan vendors are asking from me. I’m slowly drowning in these loans with no way out. Kids need to be educated in high school on how student loans work and how interest rated work. That is part of my petition, students need to take a class in high school or their first class in college on what student loans are, how interest works, and the consequences. If this would have been taught to me I wouldn’t be in the situation I am in now.

    • JB

      I totally understand TZ… Sorry this is still happening. I was a Sallie Mae victim years ago. See my post below. You are not alone and hope it works out for you. Most folks I know have had to take out a second mortgage on their homes to payoff their student loans!

    • c gulickson

      Did you get a reply about your petition? I am in a very similar situation and it is simply overwheming…..aaahhhhhhhhhhhhhhh
      The fees are just unreal ….I saw you have a link for the petition i will check it out …Good luck to us

    • bob

      I feel for you. I owe $48,000. Cannot afford to pay to pay on the loan. Sallie Mae is RUDE. When my wife was 7 months pregnant she picked up the phone and it was Sallie Mae on the line. She told them I was only making $10.00 a hour and she was 7 months pregnant. The lady told her that she needed to go get a job right now! I called the supervisor when I arrived home told her what the person said and and she told me she was listening to the phone call and the person said nothing wrong. Sallie Mae can Kiss my A$$. Signing your petition right now, Thank you!

    • Stacey

      The FIRST class for any degree should be on loan and money management. I know so many folks with this problem. Maybe a little money smarts would have prevented the whole banking crisis that we are all trying to live through right now.

  • LF

    This stories are so sad. I had a lot of student loan debt but I did receive student loan counseling. I thought you had to when you get a guranteed student loan. Did you not receive that and have to sign off on it. I think this issue goes a bit deeper as I think the cost of schools are outragious. I realize that you have to pay to get something but som are a bit much even state schools. Also the fact they fee you to death. Why was I paying a fee for statues for a campus I would never see. I could careless about a statue and if someone wants one then they should pay for it not the students. Also, the price of textbooks is a ripoff as well.

    Back to your story. You may be able to refinance you loan through Sallie Mae. Most of the documents are on the website you need to refinance or do an income sensitive or redistributed loan. Good luck!

  • Lilly

    Many State Universities are expensive because state governments are not funding them at appropriate amounts to keep costs at a reasonable level for average families.

  • Heather

    The fixed interest rate is making it difficult. I respect the fact I need to pay it back. I am thankful I had the opportunity to get the loans but my loans are currently 6.8 and 7.35%. I even paid $200-300 month as I was able while I was in school, thinking that would decrease the payments in the end. I still ended up with hefty capitalization interest charges. I have a morgage size debt to pay and all I seem to pay monthly is the interest. It’s killing my ability to pay this debt. It would be nice if we could refinance to a lower interest rate every few years.
    I’m afraid this debt will fall to my kids because I will never be able to pay in my lifetime.
    (and they have their own loans too!-better interest rate though- 3.5%)

  • Sheldon

    I don’t understand why students – who will eventually become taxpayers to support this entitlement country that is trillions in debt – are so under the gun to repay these loans! Again, these students are the future taxpayers who will fund all of the entitlement programs for all the other non-taxpayers. They have a heavy burden to repay loans on top of paying taxes!!! That is ridiculous!! What are the recipients of the all the “free stuff” being asked to pay back??? NOTHING – NADA – NOT ONE PENNEY!! These people are living on the taxpayers’ dime – womb-to-tomb – and they are not being hounded to “pay back” one penney! Their credit scores are not being dinged!! They live stress-free and tax-free and loan-free!!! None of this makes any sense – it’s ludicrous that 47% of the population gets free food, free rent, free phones, etc. while the poor students GET NOTHING FREE!! Remember – without this educated workforce – the freeloaders would not enjoy all of their free benefits. SO WHY DO THE FREELOADERS CONTINUE TO GET ALL THE FREE STUFF – YET STUDENTS – WHO ARE FUTURE TAXPAYERS – ARE HOUNDED TO REPAY LOANS????

  • JB

    I too was a victim of Sallie Mae. Before the interest rate hikes, I was constantly called and sent literature on consolidating my student loans to be locked into my current interest rate. I had a few loans with interest rates of 3-4 percent. I finally submitted the paperwork to consolidate and Sallie Mae locked me into a rate of 9 percent! What a ripoff! The same thing happened to other folks I know. I could not afford the increase in payments so I had to defer and obtain hardship derferements which only add more and more interest. My final payoff is now 4 times as much as my initial loans! I may never pay off this loan.

  • ms

    I’ve been making payments on my student loan and have not had the balance go down. I was delinquent. However, I did make arrangement to become current if I make 9mo of regular payments. Instead they sent me another offer after a year to make another six months of regular payments and pay a higher interest rate to have my credit score become current. I felt this was wrong, but unfortunately there is no way to know if this is legit.

  • TJ

    I can relate to every comment made. I am over 100k in debt, because I co-signed for my daughters loans. AND SHE NEVER FINISHED SCHOOL!!. And when I looked into it further, she signed my name to most of the loans. Now she is not paying or even communicating with them or ME! But what amazed me as we’ll was, the RIDICULOUS rates they’re charging. A 12-13% rate over the life of the loan doubles what you must pay back. To Have a 18 y.o sign these forms without first educating them is horrible. How do these people sleep at night?

  • Pingback: How student loans affect credit | Stock Market News - Business & Tech News()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster | Credit.com News + Advice()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster | ComparePlastic()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster |()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster | Consolidation Loan Advice()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster | Find Loans Today - All about loans! Find them today! | Debt | Loans | Save money |()

  • Pingback: Your Financial Benefits » Blog Archive » 4 Ways to Pay Off Your Student Loans Faster()

  • Pingback: 4 Ways to Pay Off Your Student Loans Faster | Stock Market News - Business & Tech News()

  • Pingback: 4 Steps to Help You Pay Off Your Student Loans | RocketNews()

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team