How to Pay off College Debt

Student loan debt has become a fact of life for graduating college seniors. In 2012, about 2/3 of college students will take out some form of student loans. Among those who do borrow money to pay for college, the average debt load upon graduation is $23,300. For students just starting out, often in low paying entry level jobs, paying off these loans can be a challenge. This article will give you some tips on managing and paying down your student loans.

The first step is to figure out how much you need to pay, who you need to pay it to, and when you need to pay it. The easiest way to do this is by using the National Student Loan Data System, where you can keep track of all your Federal student loans. For Stafford loans, you have a grace period of six months after you graduate. For Perkins loans, the grace period is nine months. However, other loans, including private loans, may have no grace period. Knowing when you need to start making payments is essential. According to, between 25 and 33 percent of borrowers are either late or delinquent on their first loan payment. Missing a payment can harm your credit rating, and potentially result in costly fees. There’s no reason to make your debt repayment harder than it already is! For this reason, try to set up automatic payments at least equal to the minimum monthly payment, and more if you can afford it.

The next step is to make a debt repayment schedule. By using amortization calculators such as those provided by, you can easily determine what your monthly payment will be, and even calculate how much interest you will save by paying more. If you are going to pay more than the standard payment, make sure to apply the extra payment to the highest interest loans first. In addition, make sure you are still making the standard payments on all your other loans.

What to do if you have trouble making payments:

This may be the reason you’re reading this article in the first place. If you find you can’t make your monthly payments, don’t panic. The Federal Government has some alternative payment plans. You can get information from on various income-based repayment plans, as well as options such as debt consolidation, forbearance, and Public Service Loan Forgiveness. By using these resources as well as the amortization calculator above, you can calculate your monthly payment under different plans, as well as the amount of interest you will pay and how long it will take you to pay off your debt.

Above all, deal with your student loans proactively. Start exploring alternative payment plans before you miss your first payment, not after collectors start hounding you. Debt is a problem that only grows worse when you ignore it. By making a plan before you even have to make your first payment, you can put yourself on the path to being free from your student loans, while still enjoying life in the “real world.”