How to Determine Your Strategy for Paying off Student Loans

Today Allie is taking over the blog with some tips on how to handle your student loan payments. Take it away Allie!

I graduated college with over $30,000 in debt.

If you can believe it, that’s still less than a semester’s worth where I graduated. Getting a Bachelor’s degree is expensive, and I’ll be paying for it for years to come.

Signing your life away for student loans.

Within six months after graduating — since I didn’t go to graduate school and had no deferment options — I started paying off those loans. I now pay over $200 a month.

These payments are automated through my student loan provider which, thankfully, is online. I follow a budget every month using Mint, and I keep track of my loan due dates in my calendar app. They’re the largest payment I make every month besides rent.

My mother’s a CPA, and she’s always been highly interested in optimizing the financial aid process and in helping me build a strategy to pay off loans. I’ve picked up a few tips from her over the years, and I’m happy to share them with the Red Debted Stepchild readers today.

How you handle your debt is very personal, but I’m going to offer a few recommendations based on some common situations below. Keep in mind, there are different types of student loans, and these tips only apply to federal loans and to people who don’t work in the public service sector. Other loans, like private college loans, may not have different repayment options. Here’s where you might find yourself 6 months after college graduation:

You have a full-time job that pays well.

Congratulations! You can stick with the Standard plan, paying the same amount every month for however long until your loan runs out. You can even increase your payment amount to pay off the loan faster if you’re feeling that secure. This plan will accrue the least amount of interest, and you’ll be paying off your loan sooner than on any other plan. You should also automate your payments because you know you’ll be able to afford them every month.

Pro tip: Don’t pay off the full loan. I have one loan that’s a few thousand dollars, and I considered shelling out the money so I didn’t have to worry about it. It wasn’t a good idea. Even though you’d be saving interest, you’d also be spending money that could be saved — in a 401k, for an emergency, for fixing your car, for sticky situations such as a layoffs. If you want to pay off your loan sooner, just increase the payments a bit; even $10 could really make a difference.

You have an entry-level job and you can’t afford to spend too much.

This is my current situation. Living in Boston with an entry-level salary is not ideal. I also just prefer to save when I can; I won’t even buy headphones until I see a sale on Amazon. For that reason, I opted for the Graduated  plan. I’ll start with smaller payments now, and after 5 or so years, I’ll start paying more. By then, I’ll hopefully be earning more, and can afford larger payments.

Pro tip: When you can, always give yourself some breathing room. The Graduated plan may make your loan last longer, but you won’t have to sacrifice living your twenties in poverty — so that’s an upside, right? If you’re still unsure, you should check out the Extended or Income-Based plan to see if you can get a repayment option customized for you.

You don’t have a full-time job, and you’re freaking out.

OK, breathe. First, you need to look for a job and contact your loan provider. Missing even one payment can screw up your credit and affect the rest of the loan. You can apply for Loan Forbearance, which temporarily excuses you from paying your student loans, although it will increase the length of your loan and add unpaid interest to your principal balance. It’s not a great option, but it’s an option.

Pro tip: Don’t forget to utilize your social network, your family, and your school’s alumni association to look for new jobs and miscellaneous opportunities to make money. Freelancing, dog-sitting, website testing — there are so many ways to earn passive income when you’re in a rut.

Keep in mind that you can change your repayment schedule any time, with the right reasons. You may feel like you’re drowning in debt, but there are actually many strategies you can implement depending on your specific situation. Even if you’re dreaming of bigger things, you need an effective strategy for paying off those pesky student loans.

What’s your strategy for paying off student loans?

Allison Tetreault writes for 20-somethings with loads of debt who have big dreams and small budgets on her blog, Allie Kay Tee. Want to grow your business, but can’t invest the money? Want to explore more, but can’t pay the travel expenses? Me too! Allie explores the post-grad life on her blog every week. Follow her on Twitter.

Like what you read? It’s your turn! We’ll pay you for your debt story.

Around here, we’re all about taking our debt and beating it down. Grrrrrrrr! We pay $5 for every awesome debt story we publish (whether you’re in debt, out of it, or barely living to tell the tale) so send yours our way to be considered: reddebtedstepchild[at]gmail[dot]com!

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About Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.


  1. I’ve been working to pay off my loans from law school on an entry level salary, which really isn’t that much even though I’m a lawyer. I think I’m on a “pay as you earn” plan, which offers graduated payments. It does give me some breathing room like you point out, but I have been working really hard to pay off the debt ASAP. I really want to buy a house in SoCal, and my student loans make it really hard for us to do that.

    • Hi Jessica! I know how you feel. I’ve been doing some research into making some extra side income besides my entry-level salary; have you considered Bestmark, which will pay you to review restaurants and shops in the area? I just signed up; it looks interesting! There’s also freelancing (<a href=""Problogger Job Board). What I’m really looking for, though, is a way to earn passive income, so I’ve been doing a bit more research on that. I think I’ll be writing a blog post about it soon on Allie Kay Tee. I’m sure everything will work out, and you’ll find a beautiful house in SoCal!

  2. I’ve been using the standard plan to pay back my student loans, increasing the amount I’m paying as much as possible. I have made some lump sum payments to completely pay off separate loans, but have not sacrificed or moved money away from my emergency fund like you said.

    • Hey Debt Hater! Sounds like a great strategy. Even just paying a bit more every month on the Standard plan can make a big difference. It seems like you’ve created a DIY “Extended” plan, actually. : ] I’d love to hear how much you’re saving in interest with this strategy! Could be a blog post of its own. Thanks for reading!

  3. It’s been a slow and steady process these past couple of years. I try and set a monthly goal amount and keep it there for a few months and see if I can squeeze it up just a bit more. I’m at the point where I’ll need to start earning more if I want to pay back more, but it helps me keep on going in the right direction.

  4. Hi Amanda! You’re right: It is a slow and steady process. But slow and steady wins the race! I think setting a monthly goal is great, and that’s also why budgeting is so important. I think you’ll actually save interest by paying more than the standard amount, too! Again, I’d recommend checking out BestMark and other options for earning some extra side income ; ] Hope to see you around Allie Kay Tee!


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