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6 ways to tackle student loan debt.

Whether your student loan payments are about to kick in or you’ve been making payments for a few years, chances are there are other ways you’d rather spend your money. Having a plan in place as well as a timeline to pay off student loan debt can help you avoid extra fees and interest, keep payments affordable and protect your credit. These six tips will help you get started.

  1. Understand what you owe.
    Add up all your student loan debt — including federal and private loans — so you know the total amount you need to repay. Note the interest rates and payment terms for each loan. For instance, student loans generally allow a grace period of at least six months after you leave school before the repayment period begins. Some loans have fixed or variable interest rates, and there are different options for paying back certain types of loans.

  2. Review payment options.
    Most federal loan payments are automatically set to a 10-year repayment plan. In most cases, you have the option to extend the terms if you need to. But keep in mind that, even though this will reduce your monthly payment, you’ll end up paying more in interest over the long run.

  3. Other options include income-based repayment plans, which set your monthly payment based on how much you earn, or graduated payment plans, which offer lower payments initially with increases every few years. Check with your lender to determine if these options are available for your type of loan.

  4. Prioritize your loans.
    You may have multiple loans, possibly from different lenders. Depending on the interest rate of each, consider paying off loans with higher interest rates first. These cost you more money in the long run. If you take this approach, you’ll want to make sure you still meet your other financial goals – like saving and meeting your day-to-day living expenses. A financial advisor can help you figure out a comprehensive plan for balancing loan payments and other priorities.

  5. Look for ways to save.
    You may view your student loan as a fixed monthly payment that’s set in stone, but there are ways to save:
    • Your lender may reduce the interest rate if you set up automatic payments from your checking account.
    • Remember that you may be able to deduct up to $2,500 of interest paid on federal and private student loans on your federal income tax return. Talk with your tax advisor for complete details.
    • Put any extra money like work bonuses or tax refunds toward your loan principal. The faster you pay down the principal, the less interest you’ll pay overall.

  6. Consider consolidation.
    You might be able to lower your monthly payment or reduce higher interest rates when you consolidate two or more loans. If you’re making payments on multiple loans, consolidating them into one loan with a single monthly payment and a fixed interest rate may make it easier to manage your debt.

  7. See if you qualify for loan forgiveness.
    Several programs may forgive a portion of your federal student loan if you work in a particular field, or for certain types of employers. For instance, options are available for teachers, nurses, AmeriCorps and Peace Corps volunteers and other programs. Check out the full list of programs and learn more from the U.S. Department of Education.

If you’re having trouble finding employment or can’t afford your payments, contact your lender to discuss a possible deferment or forbearance, which lets you temporarily postpone payments. Tackling your student loan debt can seem daunting, but with a solid plan in place you can pay it off, build your credit and begin working toward future financial goals.

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