Advice for Repaying Student Loans

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Student loans are debt. While this may seem to be self evident, many young people tend to regard student loans as a nuisance left over from their student days. These loans are lightly regarded until it is too late, and their credit standing has been compromised. For the recent graduate, it is wise to assess the total accumulated debt from college and establish a plan to repay it quickly.

Although the combined amounts of the student loans can be astoundingly huge, the government who backs the loans tends to make even the largest loans manageable for the borrower. The good news is that most college graduates are able to find decent jobs and have little other debt to contend with at this point. This means that with another couple of years of tight living, most of the student loans can be eliminated.

See if any government programs exist in your field to reduce or write off student loans.


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Jobs that deal in social areas like education, often have programs that target them to help pay off student loans. Usually, these programs require the young worker to stay in the field for about 5 years to reduce the loan to zero. A percentage of the loan becomes a write off each year and no payments are required during this time. Many times, loans of $10,000 to $20,000 can be repaid in this fashion.

Look for grants and scholarships during the last two years of college that might be large enough to furnish funds to reduce the amount of the needed loans.


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Sometimes, the best way to repay the student loans quickly is to find other ways to finance your education so that the loans do not need to be made. Even if you already have loans on the books, if your financial situation has improved, you may find grant and scholarship money to begin paying off your loans before you exit college. Anything that you can do along these lines is a big plus after graduation.

Try to only get loans that defer the payments and interest until after you complete your education.


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By getting loans that defer the interest while you are in school, you can save thousands of dollars in accumulated interest that would pile on top of the money that you borrowed. Also, by taking out this type of loan, should you decide to pursue an advanced degree, you can defer the loans during this time, too. This will mean that large outstanding loans will not keep you from continuing to advance your education. Hopefully, the higher degree will translate to higher earnings and an easier time repaying the loans.

Attempt to bank as much of the loan as possible without spending it when it is received.


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Instead of looking at extra loan money in terms of how many pizzas that you can buy, see if you can live without spending it. Put the excess each semester into an interest bearing account. If you can save 1/4 or more of the amount, this will allow you to pay down the loans considerably right after graduation. Smaller loans mean smaller payments and a better lifestyle for you. The argument might be made that the excess should be returned immediately. However, this will give a fund for genuine emergencies if needed. It also will accumulate some interest that will help reduce your loans even more.

If your parents have a whole life or savings type of insurance policy on you, consider asking that it be cashed in at graduation to help pay off your loans.


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Many times parents purchase insurance policies with a small savings account attached for their infant children. By the time the child is 22 or 23 years old, these policies can have a cash balance of thousands of dollars. It is possible that the policies may be worth enough to completely pay the loans. If not, they may be able to dent it enough to make your life easier. Of course, you will have to purchase some more insurance, but in your early 20’s, this should be cheap if you are healthy.

Investigate receiving an early inheritance.


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Sometimes grandparents or great-grandparents set up trust funds for their young heirs. If you have enough debt to be oppressive, they may be willing to give you an advance on your inheritance to help give your working life a boost. The problem with this approach is that it may mean that your children’s college fund has just been spent for your educational loans.

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