8 tips for managing your student loan debt

On average, student borrowers hold $39,075 in federal student loan debt. With private loans, the average may be closer to $42,673. As you graduate college, you're going to have to start getting serious about managing and paying off that student loan debt. You'll want to start by reviewing your loan details and then creating a plan that works for your budget. Below, we highlighted some tips to help you pay off your loans and stay on track for solid financial health.

8 tips for managing student loan debt

From getting the basic details to considering refinancing, these eight tips will help you get (and stay) on top of student loan debt.

1. Know where to find your student loan details

Before anything else, you need to know all the details about your student loans, including minimum payments, due dates, lender information, repayment options, and more.

For federal student loans, sign in to your Federal Student Aid (FSA) account to review the information.

For private student loans, head to your lender's online portal. If you've forgotten your lender's name, you can check your credit report for your listed debt. You can request a free copy through AnnualCreditReport.com.

2. Create a spreadsheet

If you have more than one loan, create a spreadsheet to help you clearly track your debt and repayment progress. You'll also be better equipped to create a game plan and decide which loan to tackle first. Include these columns:

• Loan issue dates
• Current balance
• Interest rate and rate type (fixed vs. variable)
• First payment date
• Minimum required payments
• Loan terms
• Applicable fees, such as early payment penalty
• Lender's name and contact details

With all of your loans listed, calculate how much you owe in total and how much you'll be paying each month with minimum payments. With this information, you're better situated to make smart financial decisions and decide how you approach paying off your loans.

You can also use a spreadsheet to clearly see all of your expenses, not just your loans, to design a budget and keep on top of your bills.

3. Review your repayment options

Borrowers should understand each of their loans' terms before they accept the money. However, if it's been a few years, you might not remember the entire agreement. As you go to start to pay off your student loan debt, it's the perfect time to review your repayment options.

With direct subsidized and unsubsidized federal student loans, you have a grace period of six months, meaning you only have to start paying back the money six months after graduation or after you leave school. The federal government also has generous repayment options, including income-based repayment plans and deferment should you have trouble meeting minimum payments.

With fewer protections, some private student loans don't have grace periods (you have to start paying it back immediately) or come with income-based repayment plans. In addition, if you miss too many payments in a row, you'll default faster on private loans than federal ones.

4. Sign up for autopay

With autopay, the lender will take the monthly payments directly from your account automatically on the same day each month. Since you "set it and forget it," you won't miss a payment and be on the hook for late fees. Some lenders even offer a 0.25% interest rate discount if you use it!

5. Pay more than minimum amount (when possible)

With each loan, you need to make a minimum payment amount. If you pay less than this number, you'll run into fees and possibly default on the loan.

However, paying more than the minimum amount when it's financially feasible can save you money in the long run (as long as your loan doesn't have high early repayment fees). Since you're paying more towards the loan, it accrues less interest over time.

6. Decide on a strategy

When you're paying more than the minimum amounts on your loans, you generally have two options to choose from: debt avalanche and debt snowball.

• Debt avalanche: You pay off loans that have the highest interest rate first. When that initial target is paid off, you move onto the loan with the next highest interest rate.
• Debt snowball: You focus on the smallest debt first. Once you pay off that smaller loan, you move onto the next smallest.

You'll save more money in the long run with a debt avalanche strategy, but some borrowers are motivated by seeing those smaller loans completely paid off with the debt snowball plan.

To decide between the two, consider your financial goals and what will personally motivate you to stay on top of your loan payments. You can also use a loan calculator to see how much you'll save by using one strategy over the other.

7. Don't let your payments lapse

Missing payments can result in late payment fees, additional interest, and damage to your credit score. Miss too many and you're in default. If you default on federal student loans, your entire loan balance is due immediately and the government can garnish your wages and withhold tax refunds. For private student loans, the lender may send you to a collection agency or sue you.

If you run into any problems with your loan or repayment, reach out to the lender as soon as possible. In many cases, they'll work with you to find a solution, and federal student loan borrowers have access to additional repayment plans and temporary relief programs. The longer you delay, the more difficult it is to solve your issues. Even if you're in default or close to it, you may still have options.

8. Consider consolidating or refinancing your student loans

In some cases, consolidating or refinancing your student loans can make repaying them more manageable.

Consolidation refers to combining several student loans into one loan. As a result, you only have one payment and one due date to track.

Refinancing your loans means combining one or more loans into a new loan with new terms, including lower interest rates or monthly payments. Lower interest rates mean you'll pay less in the long run if they're paired with similar or shorter terms. Lower minimum payments can alleviate financial stress.

With private student loans, you can consolidate and refinance at any time as long as you qualify with the lender. However, while you can consolidate federal student loans with the federal government, you can only refinance federal student loans with private lenders. As a result, you'll be giving up federal benefits, such as access to income-driven repayment plans and forbearance and deferment options.

Carefully weigh the refinancing pros and cons before making a move with your loans.

How to stay on track for student loan repayment

Paying down student loans is often a marathon, not a sprint. It's important to develop good habits that keep you on track for making payments on time and meeting your other financial responsibilities.

And you can change up your strategies as time goes on. While refinancing or paying beyond your minimum payments didn't make sense for you at first, they may make sense for you later. Review your finances and budget regularly to make smart decisions for your loans and general financial health.

If you're still going to school, you could potentially lower the amount of student loan debt by applying to scholarships. There are millions of scholarships out there for college students – even small amounts add up. Discover which awards you qualify for by using our Scholarship Search Tool today.