How to Handle Student Loan Debt : Under30CEO How to Handle Student Loan Debt : Under30CEO
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How to Handle Student Loan Debt

| August 10, 2013 | 4 Comments

Student Debt

After the graduation festivities come to an end, the weight of student debt often starts to set in. Thousands of dollars in loans loom over you and putting together a plan to manage debt feels impossible, which is why we’ve broken the process into five simple steps.

Grab your laptop or smartphone, and let’s get started.

1. Look at the Big Picture

Your first step to handling debt is taking a good hard look at the grand total, that scary number that signifies just how much you owe. Be confident and get organized. Check the National Student Loan Data System website for data on all your Federal Student Loans. If you have private loans you will need to contact those lenders separately.

2. Look at Your Month-to-Month Situation

Besides knowing the grand total of your debts, you want to look at your interest rates and how much you owe each month. Breaking the debt down into small chunks can help you breathe easier and get a realistic handle on the situation.

Compare the loan monthly payments to a budget that includes your income, fixed costs (bills you pay every month) and variable costs (estimates on changing daily expenses you pay throughout the month).

If your income doesn’t cover the total on your loan payments, don’t panic. You still have options.

3. Look at Repayment Plans

The Department of Education website lists a variety of loan repayment plans tailored to meet the varying needs of students. While you are automatically enrolled in a 10-year Standard Plan, you may be eligible for longer plans requiring lower payments that take your income into account.

Some plans designed to help people struggling with their finances require a maximum of only 10 to 15 percent of your monthly discretionary income, contingent upon meeting certain qualifications. Other plans start with lower payments and gradually increase over time.

If you have private loans, these options will not apply. You will need to contact individual lenders to see if they offer any similar programs or will negotiate lower payments.

4. Look for Alternatives

For some, making any sort of payment to lenders is impossible. Other debts or bills may eliminate your income or you may be temporarily looking for employment. However, rather than ignoring loan debts—which can make your loan delinquent or in default—communicate where you are financially with lenders.

Lenders recognize that these situations do arise and may grant forbearance (where you have an allotment of time without payments) or deferment (where the payments are postponed without interest accruing).

5. Make Payments

Whether you are starting your payment plan today or in a few months, once you know the amount owed and date everything is due, be consistent. Stick to your plan and don’t skip payments or take a haphazard approach paying on-time.

After you face the total amount you owe, this may be your hardest step in paying off the loans. If you are able, speed up the process by paying a little more than the minimum owed every month. This will reduce your principal balance and over time reduce the amount you are paying in interest.

Alanna Ritchie is a content writer for, where she writes about personal finance and little smart ways to spend (and save) money. Alanna has an English degree from Rollins College.

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Category: Personal Finance

  • cesar romero

    Alanna, great article on guiding recent graduates on taking control of their student debt before it gets out of hand, but even with this advice, students are having a hard time facing big amounts of debt and not only that, it becomes a burden and many of them question the choice of having gone to College and getting into debt for an education they could have gotten online or at the library for a fraction of the cost. I think the best way to manage debt is to stay out of debt, but it just breaks my heart that many many students are facing this hardship because they were sold on the idea that college is the path for a brighter future no matter the cost. I think the smartest thing to do is to look for alternatives to college and James Altucher wrote an article called 40 alternatives to college that I would recommend any college student to read. I’m not saying college is bad, but the cost of going to college is too burdensome for an education you can get online for free or building your own business.

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