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Going to college was the easy part.  Paying off your student loans is the hard part.  And if you’re not careful, it may take you a lifetime to do it. In the meantime, making your monthly student loan payments for the next ten, fifteen or thirty years will leave you feeling drained.

Some Startling Facts

According to Finaid.org, student loan payments are strangling a lot of college graduates. They offer some startling facts. For example:

• 65% of 4 year undergraduate students graduate with student loan debt.
• The average student loan debt is over $23,000.
• 14.6% of student loan borrowers graduated with over $40,000 in debt.

Instead of spending a lifetime digging out of student loan debt, the smart graduate will work to pay off their educational loans early. By creating a plan and sticking to it, student loan borrowers can pay off a small loan in one to three years and a moderate loan in four to six years.

Five Ways to Pay Off Your Student Loans

Here are five way things you can do to get out from under your student loans early so you can stop paying and start living.

1. Eliminate extras: Cut out designer coffee, movie nights and dinners on the town. You can use the cash you save to pay down your student loan debts.
2. Sell your car: The money you spend on car payments, insurance and gas can be reallocated to lightening your debt load. Use public transportation or get a bike.
3. Move home: Getting out from under Mom and Dad’s thumb may be a dream- come-true. But if you stay at home for an extra year you can chip off a big chunk of your debt.
4. Take a second, or third, job: By taking a minimum wage job and working twenty extra hours a week you can earn seven thousand additional dollars towards your student loans in one year.
5. Sell your stuff: It’s just stuff. And most of it you probably don’t need. Cashing out your trash will help slice your student loans.

What Not To Do

Don’t be tempted or get too creative. You may regret it. Some solutions may seem attractive at first, but in the end, they’re a recipe for trouble. Here are a few tricks you’ll want to avoid:

1. Skipping payments: If you fail to pay your student loans or don’t pay on time, your credit rating may be adversely impacted.
2. Using your credit card or a home equity loan: Rolling your educational debt into another loan won’t solve your problem. It will just create more debt.
3. Cashing out your retirement funds: If you tap into a 401K plan, you’ll likely take a big tax hit. In the end, you’ll end up losing money instead of saving.

Don’t spend the rest of your life paying off your student loan debts. Make a plan and stick to it. If you do, you’ll be out of debt before you know it.

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Student loans can create a big strain on the budget. It’s very common to have trouble making student loan payments. Don’t just ignore the situation, however. Defaulting on student loans can destroy your credit for a very long time. Instead, analyze the situation and adopt some survival strategies.

Before you begin, you must know your loans. Do you have federal student loans or do you have private student loans? Federal student loans offer many more options for dealing with payment issues, but there will still be some options for dealing with your private loans too. Private loans may offer loan modification programs that can help you, and some private student loans may even have some forbearance options. Private loans can be the most devastating loans to deal with, however, so if you haven’t taken any loans yet, try to avoid private loans if you can.

You can usually save time and money by consolidating your loans before you start trying to use any of the strategies for dealing with payment problems. This reduces the number of phone calls you’ll need to make and the number of forms you’ll have to fill out. It also means you’ll only have to negotiate with one lender.

Here are some strategies you can use if you are having trouble making payments on your federal student loans. Using these strategies is as simple as calling your loan provider and asking for the appropriate forms. These strategies are all very healthy for your credit report as the banks will continue to report “Paid or Paying as Agreed” every month so long as you meet the terms of each of these programs.

Ask for a deferment

When you defer a loan, you don’t have to pay, and interest does not accrue. A deferment can buy you up to 9 months. Some loans can be deferred multiple times. You do have to meet certain conditions for a deferment. There are deferments for temporary disability, for enrollment in rehabilitation programs for the disabled, for enrollment as a full-time student, for temporary unemployment, and for economic hardship. There are limits on how many times you can defer your student loans, but deferments are ideal for getting you through temporary situations.

Try forbearance

If you don’t qualify for a deferment you may qualify for forbearance. Interest accrues during forbearance, but you don’t have to make payments. Furthermore, the typical length of forbearance will buy you a year of time. Forbearances are easier to obtain than deferments are. You can typically obtain forbearance if you have health problems, if you have unforeseen personal problems, if your monthly payments amount to more than 20% of your monthly income, or if you have an inability to pay off the loans during your loan term.

Try a graduated repayment plan

Graduated repayment plans can help if you simply need lower payments. Graduated payments start low, but increase over time. There will be no surprises as you will be provided with a schedule ahead of time. It’s a good idea to use the time to either gain more income, or to attempt to remove some expenses. Paying off another bill to free up some money, for example, might be a good strategy to adopt. Always take a long term view that is aware that those payments will go up in the future.

Extended repayment plans are similar, but these payment plans increase your loan term. They are typically only available to people who have $30,000 in student loans, or more.

Try an income-based repayment plan

Income based repayment plans set a payment based on your income. This payment will change each year as your income changes. If you live below the poverty line your payment will be set to “zero.” Most other people will typically see payments of no more than 10% of their monthly income, though the percentage gets higher as your income rises. The total percentage is capped at 15% of your monthly income. It’s very important to fill out the appropriate paperwork year after year. If you stay on the plan for 25 years your loan will be cancelled, but the forgiven amount will be taxed as income. You’ll need to consult a tax professional to minimize the impact of this “income” when the time comes.

Take a public service job

Certain forms of military and law enforcement services make you eligible for loan cancellation. You can also get your loans cancelled if you provide certain services to needy populations, including some teaching and health care jobs. Public service can also apply: the Peace Corps, for example, is one eligible program. If you can get your loans cancelled you certainly will never have to worry about grappling with the payments ever again.

Don’t let a fear of student loans keep you from getting the education you need. While it is true that student loans cannot be discharged in a bankruptcy there are still many other ways to keep your payments from becoming a hardship.

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