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5 Tips to Better Manage Your
Monthly Student Loan Payment

Student loan debt has reached a crisis level in the United States. In the not-too-distant past, Americans could obtain a college education without going tens or hundreds of thousands of dollars into debt. Today, the average graduate has around $30,000 in debt at graduation.

While having hefty student loans can be problematic in and of itself, this kind of debt can pose other sorts of difficulties. More college graduates are finding themselves putting off other life goals due to their student loans. They might be unable to qualify for a mortgage or auto loan, or they may be pushing back getting married and starting a family while they work on paying off their student loans.

For these reasons, paying off student loan debt should be a priority for anyone who is carrying it. Read on to pick up some tips on how you can tackle your own debt and manage your monthly payments.

1. Make Payments Every Two Weeks

This first trick is relatively simple: make half of your student loan payment every two weeks, rather than making a full payment once a month. Doing this can help to chip away at your student loans in two ways.

First, less interest will accumulate on your loans since you will be paying at least twice a month instead of once. Second, when you make 26 half payments (52 weeks divided by 2), you’ll be making 13 full payments a year — which works out to an extra payment each year. This is a relatively painless way to pay off your student loans more quickly. 

Of course, not everyone can afford to squeeze that extra payment into your budget. While you can sync these student loan payments with your paychecks, make sure that the extra payment amount will fit into your overall budget before committing.

2. Check into Student Loan Benefits at Work

Employers are constantly looking for ways to attract and retain talent, and an increasingly popular way to do so is through student loan repayment benefits.

The way it works is simple: employers offer a set amount (usually between $100 to $200 per month) to employees, which is paid directly to their student loan servicing company. This extra bit of money can help employees pay off their loans more quickly and is a great benefit. If your employer doesn’t currently offer student loan repayment, consider asking them to do so.

There is one drawback to this benefit. Under current law, this type of benefit is considered taxable income. While the advantage of this benefit usually outweighs the increase in taxes, be sure that the $2,000 to $3,000 increase in taxable income won’t be a budget-breaker for you before signing up for this benefit.

3. Consider Student Loan Refinancing

Student loan refinancing is a great way to obtain a lower interest rate so that you will be able to pay off your loans sooner — and pay less overall in interest. 

When you refinance, you are applying for a new loan, which is then used to pay off your old loans. If you have a stable income, good credit score, and a history of making on-time payments on your student loans, you may qualify for a better interest rate than you did when you first applied for the loans as a student.

However, not everyone who applies for refinancing qualifies, or obtains a loan with more favorable terms. Be sure that your credit history is solid before applying to maximize your chances of getting a good interest rate on a refinance loan.

4. Look into Federal Loan Consolidation

For borrowers with federal student loans, federal consolidation can help you get immediate relief if you are struggling to make monthly payments. While you cannot refinance student loans through the federal government, you can consolidate them to obtain a longer loan term of up to 30 years. This will allow you to make a lower monthly payment.

Borrowers should be aware that consolidation will not save you money in the long-term, as extending the payments will mean paying more interest over time. While consolidation can be a way to immediately reduce your monthly student loan payments, it is not a good option if you are seeking to pay off your student loans more quickly.

5. Sign Up for an Income-Driven Repayment Plan

Income-driven repayment plans, or IDRs, allow borrowers to reduce their monthly student loan payments if their debt is high compared to their income.

There are four different IDR plans, three of which cap your payment at 10% of your discretionary income for a period of 20 to 25 years. The fourth plan caps your monthly payment at either 20% of your discretionary income or what you would pay with a fixed plan over 12 years. If the loans are not completely paid off within the loan term, then the balance is forgiven.

There are two major drawbacks to an IDR plan. First, borrowers pay interest on their student loans while in these extended repayment periods. Second, if their student loans are forgiven, the amount that is forgiven is considered taxable income. This can make using an IDR very expensive at the end of the loan term.

Bottom Line

If you are having trouble making your monthly student loan payments, these options for paying off your student loans may be helpful. Just be sure to closely consider the disadvantages of each plan before signing up for any of them.

Andy Kearns is a Content Analyst for LendEDU and works to produce personal finance content to help educate consumers across the globe. When he’s not writing, you can find Andy cheering on the new and improved Lakers, or somewhere on a beach.

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