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Last Updated on December 4, 2019

Student loans are a central issue in America today. About 70 percent of college graduates are leaving school with a major loan burden—over $37,000 on average. That kind of debt right away can severely hamper one’s ability to do things like buy a home or save for retirement. 

Student loans are a central issue in America today. About 70 percent of college graduates are leaving school with a major loan burden—over $37,000 on average. That kind of debt right away can severely hamper one’s ability to do things like buy a home or save for retirement. 

Fortunately for recent graduates, there are some things that can be done in order to pay down that debt. 

Understand All Your Debts 

If you’re graduating from school with a host of student loans from a variety of lenders, you might not even know the specifics of them all. Add in credit card balances or an auto loan on top of that, and you might be in a really convoluted debt scenario. Recent graduates with several loans first need to gather up all the information to understand what they owe, how much they must pay, and when they need to start making payments. You can look in the National Student Loan Data System if you need help finding any loans.  

Build a Budget

You’ll want to create a budget in order to set aside enough money for loan repayment every month. Even if you don’t have debt, it’s smart to keep track of how much you spend and earn. But this is especially true for recent graduates who must start paying back student loans with an entry-level job. 

First, get all your financial information together. This includes all loans, your bank statements, recurring bills, insurance, or any other ongoing expenses. Also, look to see how much you’re spending each month on variable costs (food, entertainment, etc.). You’ll then need to total up your income. Hopefully the money you’re bringing in will be greater than your costs. If not, then you need to cut out some non-essential expenses (think memberships or eating out), add more income—or both. 

Live at Home or Somewhere That Offers Monetary Incentives 

You’re going to get a much better handle on your loans if you’re able to save more money. People who have the option to live at home for a time after graduation should cash in on this opportunity. Rent often accounts for at least a fourth of your take-home pay. Being able to dedicate that much of your paycheck to loans will allow you to pay down debt in much less time. If living at home isn’t possible, consider other ways you can save through your living situation. Roommates are a great way to spend less, as you can split the cost of an apartment, while also spending less on utilities. There are also some cities that will pay you to move there. For example, Tulsa is offering to give remote workers $10,000 to live there for a year

Deduct Student Loan Interest

It’s important to keep your loans in mind when tax season rolls around. You’re able to lower your taxable income by up to $2,500 depending on how much student loan interest you paid that year. That can potentially save you hundreds of dollars on your taxes, which can then help you further pay down your loans. 

Pay More Than the Minimum

Depending on your loan amounts and terms, it might make sense to pay more than the minimum each month. Higher interest rate loans are going to take a lot longer to pay off if you’re only making the minimum payments. Going further into that point, you should decide whether you want to pay off your lowest balance loans or highest interest rate ones first. Doing the first method, despite costing you more in interest payments over the long term, can be more effective for a lot of people due to the motivational boost.

Consider Consolidating Loans

People with a lot of unsecured loans might want to consider debt consolidation. This is where multiple loans or lines of credit are bundled together into one simplified payment, usually through a low-interest consolidation loan. People who plan to pay their loans back, but are struggling to keep up with so many different ones, can greatly benefit from this—especially if it lowers their overall interest rate.

Some borrowers with serious unsecured debt might qualify for combination debt settlement and consolidation. Enrollees in a program called Consolidation Plus, for example, pay back a single loan to Freedom Debt Relief after the company negotiates with creditors in an attempt to reach a settlement agreement that’s less than the original balances owed, and pays off those balances. This streamlined program can be a helpful option for consumers who want to avoid bankruptcy but just can’t manage their multiple loans as they stand. 

Hunt for an Employer that Helps Repay Student Loans 

Some employers today are providing student loan forgiveness programs to new hires. This is a way for companies to ensure that they get the most talented people working for them. Major organizations such as Penguin Random House, Aetna, and others, are offering their hires thousands of dollars in assistance

Don’t Take Out More Debt

This can be easier to say than do, of course. Debt is gasoline for the engine of the American economy. Living without it can be very difficult—if not impossible—for most people. However, there are some things that you can avoid in order to not take out too much debt right after graduation. For example, it might be smart to wait on getting married, or taking a big vacation, until you’ve made some headway with your student loan repayment. 

Set Up Automatic Payments

Setting up an automatic payment to deduct money directly from your checking account will keep you on track to pay off your debts. But there’s another benefit to doing this. Some lenders will offer an interest rate reduction if you use auto-pay (often 0.25 percent). This might not seem significant, but it can add up to hundreds (or more) dollars over the course of your repayment. 

Find Extra Income Streams

It’s not the most glamorous solution, but making more money is one of the best ways to pay down your loans. Fortunately, with the advent of the Internet, it’s now easier than ever for people to find a side job for a few hours per week to make some additional income. This can include freelancing your services, putting your apartment or car on a peer-to-peer sharing service, or even just selling things on eBay. 

More than ever, college graduates are needing to find ways to pay down debt. This can be an extremely intimidating process for those just entering the working world. But it’s not impossible. Follow these suggestions to get a head start on paying down your loans after graduation. 

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