Student loans are a burden many people face today.
Student loan debt has skyrocketed past $1.4 trillion recently.
College graduates continue to graduate with record-breaking student loans.
Many people don’t have any idea how to get their student loans under control. A huge student loan balance can leave people feeling overwhelmed and paralyzed as to what to do.
You often don’t get to live the life you imagined. Student loan debt has forced many to put off marriage, going on vacations, and home ownership.
High cost of living and stagnant wages add to the problem.
If you’re overwhelmed by your student loans, consider taking the following actions to get your student loans more manageable.
Understand Your Loans
The first step to making your student loans less overwhelming is to get clear on the amounts, interest rates, minimums, and repayment length.
It doesn’t matter whether you have $20,000 or $100,000 of student loan debt. Laying out all the details for your loans helps you get a clear picture, which also helps you decide on the best course of action moving forward.
You can use our free student loan spreadsheet below to gather and compare all your student loan data.
Join our Online Community to Receive your FREE Student Loan Spreadsheet
Not sure where to find information on your student loans? We explain how to find all of them in this post.
Consider Consolidating or Refinancing
Consolidating or refinancing are similar but differ in how they are offered.
Consolidating your loans doesn’t allow you to save money on interest by getting a lower rate. Your new interest rate is taken from the weighted average of your previous loans and rounded to the nearest one-eighth of one percent.
If you have several federal loans, consolidating can simplify your repayment by combining all of your loans into one so you only have to make one monthly payment. No more having to remember different loan details and payment amounts.
You can consolidate your Federal student loans through the Department of Education via a Direct Consolidation Loan.
Refinancing your student loans through a company like SoFi, could give you a lower interest rate and potentially save you thousands of dollars over the course of repayment.
Consolidating or refinancing your student loans can help you manage your payments better however the decision to do it shouldn’t be taken lightly.
If you have mostly private student loans, refinancing can be a way to get a lower interest rate. However, if you have mostly federal student loans, refinancing means losing out on options like income-based repayment, extended repayment, graduated repayment, and loan forgiveness options.
Understand Your Federal Benefits
As mentioned above, if you have mostly federal student loans, there are different repayment plans you could qualify for.
The standard 10-year repayment plan is the most common one. Others include graduated repayment, extended repayment, and income-driven repayment. Other than the standard 10-year repayment plan, income-driven repayment is becoming the most popular because graduated and extended repayment are not eligible plans for loan forgiveness nor do they take into consideration your income.
Income-driven repayment plans are tied to the income you make. If your minimum monthly payment is high in comparison to your income, you could qualify.
Sign Up For Auto-Pay
Most lenders have an option to auto-pay your student loans monthly. As an added incentive, they usually give a 0.25% reduction to your interest rate.
This may not seem like much, but every bit counts. Just make sure you have enough in your bank account to cover the auto-pay amount to avoid any overdraft fees.
Ready to take control of your student loans?
This book is for you.
Student Loan Solution: 5 Steps to Take Control of your Student Loans and Financial Life
Track Your Progress
Consistency is important in personal finance. Keeping track of your progress allows you to stay motivated and have a better shot of hitting your goals.
You can track your progress through regular updates of your student loan spreadsheet or a free tool like Personal Capital.
Personal Capital is a financial management service that allows you to track your assets, liabilities (this includes your debt), and get a full picture of your finances. Seeing your full amount of student loan debt can potentially cause feelings of resentment and regret. You wonder how to manage your debt and if it was even worth it.
Regardless of whether you have a little or a lot of student loan debt, don’t ignore the situation. Use it as motivation to take action.
Look into different repayment plans, set up a budget, figure out ways to increase your income, and be proactive.
How do you prevent yourself from getting overwhelmed by student loans? What actions have you taken to make your situation more manageable?
I’ve been tracking my student loan debt (and all other debt plus investments) for just over a year now. It’s amazing how much I’ve paid off in a little over a year!
I track my payments each month through mint. I also have a calendar with my due dates. My Navient loan is also on auto pay.