How to Manage Your Student Loan Debt

Published on May 06, 2022

How to Manage Your Student Loan Debt

According to the Congressional Research Service, student loan debt now totals more than $1.6 trillion and continues to climb, placing an economic burden on many young people that is difficult to overcome. Student loan debt has become a national crisis, and the COVID-19 pandemic made it worse.

To mitigate some of the financial struggles for graduates, the government has suspended most federal student loan payments since March of 2020, also freezing interest on government-held federal student loans and ceasing collections activity against borrowers in default on federal loans. The Biden administration recently announced it would extend the pause on federal student loan payments to September 1, 2022.

While that buys borrowers a little extra time to plan, it doesn’t remove the debt. The Class of 2017, for example, owes an average of $37,000 for a four-year degree. Here are some tips for how to best manage your student debt.

Know What You Owe

If you, like most graduates, had multiple student loans (both federal and private), it’s important to determine your total debt overall. The number you come up with may be daunting, but you must know exactly what you owe before you can make a plan to pay it off.

Learn the Terms

Make sure you also understand the terms of each loan – they may have different interest rates, repayment rules, etc. and you want to be sure you comply with those terms to avoid extra interest, fees, or penalties. Check out the Dept. of Education’s online resource on Federal Student Aid to help students find the best way to manage and repay their loans. (Note, in additional to the Federal pause on student loan payments, most loans have a 6 to 9-month grace period after graduation before you have to start paying back the loan.)

Explore Consolidation

You may want to consider consolidating all your loans into one monthly payment. There are advantages and disadvantages to this. Your monthly payment will likely be less than you are paying now on multiple loans, but it will usually extend your payoff period, meaning you’ll be paying more in interest over time. You also want to check and make sure that the interest rate on your consolidated loan isn’t higher than your existing loan terms. Finally, understand that consolidation will disqualify you from deferment options or income-based repayment plans.

Consider Different Debt Strategies

You can use the debt avalanche method to pay off the loan with the highest interest rates first, and then move on to the second highest, etc. To do this, budget a certain amount over the total required monthly payments and put that overage towards the most expensive debt. Once the first debt is paid off, dedicate the overage (plus what you were putting towards the first debt) to the next debt and so on.  Another strategy is to try to pay down the principal whenever you can, which will lower your interest payments. However you decide to tackle your debt, set up automatic loan payments which will keep you on track and may give you additional discounts.

Make Alternative Plans

If you have a federal student loan, you may be able to contact your loan service provider and explore alternative payment plans including graduated repayment, extended repayment, income-contingent repayment, and pay-as-you-earn plans. These options are not applicable to private student loans. If you are not yet employed and struggling financially, you may be able to have your loan deferred, which means you are not required to make payments for a set period of time. In extreme cases, you may be able to apply for loan forgiveness.

Get Help When You Need It

Finally, find a trusted financial partner who can help you manage your finances throughout all stages of your life. At Valley, we can provide you with the financial planning services and advice and guidance you need to help you every step of the way. Visit to learn more or contact us.

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