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4 Tips For Handling Student Loans



These days, it’s impossible to get into the college or university of choice without taking out a loan. The harsh reality of tertiary education in the U.S. is that it’s simply too expensive for the average American—and the numbers prove it.


A 2018 review of tuition fees from private and public universities throughout 30 years has revealed an alarming spike. In 1971, the average cost per year (tuition, room, and board) was USD$ 18,140 and USD$ 8,730, respectively. In 2018, it jumped to USD$ 48,510 and USD$ 21,730. In fact, the only time when fees went down was between 1974 and 1980, after which they just kept rising.


As long as tuition fees continue this trend, more and more will be taking out student loans, which means more and more will fall into the student debt trap. Even with the new administration under President Joe Biden proposing loan forgiveness legislation, experts don’t bank on it as a long-term solution. And all the while, the cost of education isn’t going down anytime soon.


While the outlook seems grim, student debt relief is still possible for the beleaguered graduate. For the record, anything you do in the name of doing away with such a burden won’t be easy. But with the right decisions and actions, it’ll disappear before you even realize it. Consider the following tips for handling student loans like a pro.

  1. Take Advantage of Refinancing

The cost of education is so high that many people take out both federal and private loans to cover it. Paying off just one loan is problematic enough, but paying off two can leave you miserable for the rest of your life. But there’s a way to lessen the pain.


Refinancing refers to taking out another loan with a lower interest rate to replace your burdensome current loan. While requirements to qualify may vary by lender, you generally need a credit score of 600 or higher and a steady income. If you don’t meet either, you can have someone who qualifies to cosign the loan with you.


As anyone who has experience crunching loan numbers can attest, interest rates are deceptive and dangerous. A massive chunk of your payments can go to interest instead of paying off the principal. Refinancing removes five percentage points off the interest rate can save you as much as USD$ 18,000, based on a USD$ 100,000 student loan.


However, take note that refinancing isn’t suitable for everyone. If you’re paying for a private loan, then refinancing is highly recommended to secure better terms. But nine out of ten active student loans are federal loans. Refinancing them can mean being ineligible for loan forgiveness and other federally-backed benefits.


If you still want to consider federal student loan refinancing, experts recommend doing so before September 30, 2021. This date refers to the deadline of the COVID-19 Emergency Relief measures on ED-owned federal student loans (initially January 31). Consider going down this road if you:

  • Want to settle for a low rate in the long run

  • See interest rates increasing by 0.5% or more later

  • Earn more investing than paying off the debt early

  1. Get Your Finances in Order

The first step in dealing with student debt always involves taking a look at your financial situation. Even if the loans aren’t hitting your finances too hard, it pays to review your expenses and reduce them where you can. 


With the COVID pandemic raging on, now’s the best time as any. Since the past year, lockdowns and quarantines have forced people to change their spending habits, from work-from-home setups to building up their savings accounts. Some expenses have gone down, while others have gone up. You’ll have to draw up a new budget plan based on these changes.


This new budget should focus on paying off your debts, as a pandemic won’t stop them from going up. Since you’ve been going out far less, allocate your gas or commuting budget to helping settle your dues. Keep in mind that the longer debt stays stuck on you, the more it’ll hurt in the long run.

  1. Earn Extra Whenever Possible

As salaries have barely kept up with inflation, living by the paycheck isn’t just practical anymore. Making a little money on the side is the name of the current game. It doesn’t have to be a full-time gig, just enough to allow you to pay above the minimum.


As mentioned previously, the current pandemic is as perfect of a time as any. Most available jobs are now remote setups, allowing you to make a living without leaving your home. Depending on your profession, a side job can pay up to USD$ 40 per hour. A couple of hours a day will get you enough cash to add to your minimum payments, making paying off student debt faster. 


Even among college students, it’s not unusual to start a side job to help them pay for their college. It may be the time when they come up with a novel idea, marking the start of an influential brand. If you’re only looking to support your tight budget, then that’s okay, too. 

  1. Enroll in an Auto-Debit Arrangement

An auto-debit arrangement (ADA) means you allow your creditors to garnish dues from your bank account. Provided that you have sufficient money in your account, ADA is an easy way of making payments on time and not incur penalties. 


Most federal and private student lenders offer ADA because even they see its convenience. In fact, some lenders encourage borrowers to pay this way by providing a reduction in interest rates, mostly by 0.25 percentage points. It may not look much, but that translates to hundreds of dollars saved.  That much money can help pay off other debts like credit cards.



As the federal and private sectors look for ways to get rid of this crisis, the best thing the American graduate can do is be smart about spending. These tips may require a great deal of motivation and sacrifice, but the rewards are worth your while. Remember, you’re in control of your finances, not the loan.