There’s no denying it: student debt is on the rise with the cost of college increasing by high amounts nearly every year. The average student debt load clocked in at $29,200 for the Class of 2018, according to a report from The Institute of College Access & Success (TICAS). But a high student loan balance doesn’t mean you have to be in debt for the next 20 years—especially if you start repayments as soon as possible. Paying off your loans early not only gets you out of debt faster, but it also lowers your total cost because of high interest rates spiking the cost over time. These eight tips can help lower your student debt load, even if you’re still in school.
1. Make micropayments while you’re still in school
The best way to lower your student debt load is to start making repayments right away, if possible. While you usually don’t have to make repayments until six months after graduation, interest starts adding up as soon as your loan is issued (in most cases). This interest gets added to your loan balance once repayments begin—meaning you’re paying interest on interest. Making payments on interest can help you avoid this while you’re a student. But even contributing as little as $25 a month can lower your total amount once your grace period is up, as there will be a lower total to accrue interest on.
2. Start making full payments ASAP
Making full payments means you’re paying off your loan’s interest and the principal balance—the initial cost of the loan without the interest cost factored in. Starting as early as you can afford to is also key to lowering your loan balance. It can get you out of debt faster and reduce the total cost of your loan since interest has less time to add up. If you start working straight out of school, make room in your budget for student loan repayments as soon as you can. Even if you need to take a few months off after graduation, try to start repayments before your grace period ends to get ahead of your loans.
Related: What You Need to Know About Taking on Student Loans
3. Choose a short loan term
It might be tempting to spread out your student loan payments over 20 or even 25 years—but you’ll be paying a lot more in interest over time. In some cases, you might even end up with a higher loan balance than you started with after years of repayments. (I should know—this happened to me.) Create a budget before you pick your loan payment plan; typically the best option is the one that gives you the highest monthly repayments you can comfortably afford. And don’t be afraid to make adjustments. If you get a significant bump in your salary, talk to your lender about shortening your loan term even more.
4. Look into repayment assistance programs
The Public Service Loan Forgiveness (PSLF) Program has given forgiveness a bad reputation with its 99% rejection rate and 10-year turnaround. But other forgiveness and repayment assistance programs can slice tens of thousands of dollars off your student loans in just a few years after graduating. Generally, these are incentive programs to bring qualified professionals to underserved areas. They typically come with a work commitment from one to four years, usually initially in a low-paying position. You’ll have the most options for forgiveness if you work in public service or a field like health care, law, or education.
5. Look for jobs that offer forgiveness as a benefit
Don’t want to sacrifice your salary for repayment assistance? Some companies have started offering student loan repayment assistance as an employee benefit, like health insurance or a gym membership. These usually aren’t as generous as other repayment assistance programs, but the higher paycheck might make up for it—and after all, every little bit helps.
Related: Don’t Fret the Debt: 5 Ways to Conquer Student Loans
6. Make extra payments when you can
Putting any extra money you come into toward your student loans is a great way to lower the cost, even if you haven’t graduated yet. Did you get a bunch of money from family for graduation? Dump it into your loans. Did you get a bonus from your full- or part-time job for exceptional work? Put it toward your loans! Unless you had another plan for that extra money, there’s no reason for it to burn a hole in your pocket when your loans are trying to burn a hole in your financial stability.
7. Consider refinancing your private loans
Refinancing can help you qualify for lower rates and more favorable terms on your private student loans, reducing the cost in the short and long term. It can be a great way to save when you’ve landed a higher-paying job or improved your credit score. But you can also get a head start by applying with a cosigner while you’re still in school. If you have federal loans, however, think twice. You’ll lose benefits like income-driven repayments and extensive deferment and forbearance options if you refinance those. Before making any official decisions on refinancing—with federal or private loans—do your research!
Related: 5 Potential Downsides to Refinancing Your Student Loans
8. Avoid deferment and forbearance
While putting your student loan repayments on hold can be extremely helpful if you get laid off or take a financial hit, it comes at a heavy price. Even though these options pause repayments, they don’t usually pause interest. The interest that adds up during deferment and forbearance gets added to your loan balance, making your total loan amount and monthly cost higher than when you started.
The bottom line
You don’t have to wait until your grace period is up to start paying off your student loans. In fact, getting a head start on your student loan payments is one of the best ways to reduce your balance and total cost. If you combine that with repayment assistance, you might be out of debt faster than you expected.
For more advice on student loans and how they work, check out our Financial Aid section or “student loans” tag.
