How to Best Deal With Student Loan Debt

Student loan debt can seem overwhelming. As of this writing, there’s more than a trillion dollars in outstanding student loan obligations. If you’re a recent grad, it might seem to you as though you have the lion’s share of that total.

The good news is that there are ways to deal with your student loan debt. Here are a few pointers to help you out.

Take Advantage of the Grace Period

If you’ve just graduated, then you might be in the so-called “grace period.” That is, you have some time before you have to pay off your loan right away. While it might be tempting to just ignore your debt completely during the grace period, you can go a long way towards reducing you college loan debt if you start paying it off immediately.

Figure out what your loan payment is going to be and start putting money away for it as soon as you get your first paycheck. Then, when your first loan payment comes due, pay all of what you saved. You’ll take a nice chunk off of your principal right out of the gate. That’s one of the best ways to start to pay off student loans.

Stick to a Budget

The temptation for many recent college grads is to immediately start “living the good life” as soon as they’ve deposited their first paycheck after starting a new job. That’s a temptation that will make it more difficult to erase your college loan debt.

Maintain your college-like spartan lifestyle as much as possible, even after you’ve graduated and started making good money. That way, you can get out of debt sooner and start enjoying the finer things in life later on.

To that end, you’ll want to develop a monthly budget and stick to it. Itemize your monthly expenses and spend no more than you’re “allowed” to do so for each item. That includes entertainment. Skip the night at the bar with your friends if you want extra cash on hand to pay down your student loan.

Generate Additional Income

You’re a college grad. You have marketable skills. There is probably more than one person out there who is interested in your skill sets.

You don’t only have to hold one job once you’ve graduated from college. Get yourself an additional source of income so you can pay down that student loan even faster.

Deduct Your Student Loan Interest

Did you know that Uncle Sam allows you to deduct student loan interest from your overall income? As of this writing, you can deduct up to $2,500 in annual student loan interest from your taxes.

Take advantage of that deduction and you might end up getting a refund next April instead of owing the government money.

Put Your Payments on Autopilot

One of the smartest things you can do is to put your college loan debt payments on autopilot. You should set up a system whereby your creditor automatically takes the monthly payment for your student loan from your checking account. That way, the choice about making the payment is taken out of your hands and it happens automatically. You’ll also reduce the risk of late payments.

Even the best student loan can seem difficult to overcome. However, with a bit of financial discipline and a little know-how, you can tackle that monstrous student loan debt and use your money for better things.