Americans Have $1 Trillion in Student Loan Debt. Here’s How to Start Repaying Yours

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Do you feel a familiar dread when a certain Sallie shows up in your mailbox? Do those five-figure (or higher) balances glare up at you, seemingly impossible to comprehend, let alone pay off?

You’re not alone.

A Nation in Debt

American have one trillion dollars of student debt, according to a recent report.

Since a stack of a trillion dollar bills would reach to the moon and back not once but four times, according to Neil deGrasse Tyson, our student debt is literally astronomical.

The average borrower owes $27,000 and hasn’t turned 40 yet, and the problem is amplified by relatively low salaries of $40,000 or less. This is especially true for women, who continue to earn less than men for the same jobs. 

The good news is, you can conquer your student loans, as daunting as they seem — though it might take some time.

Honey Smith shared her “retrospectively gained wisdom” at Get Rich Slowly. Here are a few of the highlights.

The #1 Tactic: Don’t Get Into Debt

I know this may sound flippant. College is expensive, right?

Well, not always. But either way, you don’t have to go into debt.

While it’s easy to get deep into student loan debt, there are strategies you can use to make college more affordable.

For instance, why not ditch the room and board, and live at home? While it might not seem cool now, you’ll be able to afford way better digs later.

Similarly, you could consider heading to a less expensive (or free!) community college for two years and transferring to an expensive university only after you’ve earned an associate degree.

No matter what, Smith’s commenters suggest you make sure you find ways to earn money during college. Those hours serving up cappuccinos can help diminish your reliance on student loans.

Finally, keep in mind a lot of free money is available for students who look for it — both need- and merit-based scholarships, and some wildcards too. Often, the difference between big debt and no debt is just going through the trouble of looking for the cash!

If You’re Already in Debt: Strategize, Strategize, Strategize

It’s easy to pay the minimum amount required every month, but you could be struggling under those loans for over a decade.

One of the most important steps to tackling your student debt is to make it a priority, according to Smith and the commenters on her post.

When you’re taking out loans and decorating your new dorm room, you may not realize the real-world impact your debt has on your ability to save for travel, a home or starting a family.

So as soon as you start making money, you need to knuckle down and pay your student loans first — maybe even before you graduate. One blogger’s prioritization allowed him to repay his $46,500 debt in just two years.

The first step is to figure out how much you owe, which can be more confusing than you’d imagine, since lenders can sell your accounts or cut financial aid checks through a third party.

Next, choose a repayment plan that suits you. Smith explains many of the available options, from fixed and graduated repayment plans to pay-as-you-earn.

Once you’re enrolled in a repayment plan, work on lowering the principal amount first.

When you pay more than the minimum requirement — which you should — make sure the extra funds go toward the principal amount, rather than the interest. If you pay biweekly, you’ll end up making an extra payment over the course of the year without it feeling like a strain.

It pays to be on time with your payments — you might even score a reduction in your interest rate by setting up auto-pay.

Try a side hustle to make extra money or look for jobs with loan repayment benefits.

Finally, consider consolidating your loans or refinancing if your interest rate is high (5% or more) — though you should exercise caution and do your research before taking this option.

Still having trouble? Communicate with your lenders. They may offer options for loan deferral — and you’ll want to take advantage, since those who default on student loans can have their tax return or wages garnished.

Keep At It

If you’re like most recent grads, the five-figure number on your student loan statement might be more money than you’ve ever handled. Staggering numbers can seem meaningless or even unimportant, making it easy to just accept you’re going to be in debt for the rest of your life.

But if you prioritize your student debt and think about that cash in terms of real value, you can stay motivated to lower that total. Getting out of debt is the first step toward saving and growing your money for travel, a home or even early retirement.

Don’t cheat yourself out of a better life by accepting debt as inevitable. You can do it — and you should get started today.

Want to know more? Read Smith’s full guide on Get Rich Slowly.

Your Turn: What strategies have you used to beat student debt?

Jamie Cattanach is junior writer at The Penny Hoarder and a native Floridian. She’s passionate about learning, literature, chocolate and finding ways to live the good life as cost-effectively as possible.