How to Pay Off Your Student Loans So You Can Get On With Your Life

by Kevin Mercadante

For an entire generation, student loan debt has become a crippling fact of life. Part of the problem is the sheer size of student loan debt. For the Class of 2013, average student loan debt is approaching $30,000 and about 70% of graduates are carrying them.

How can you pay off your student loans so you can get on with your life?

Here are some strategies to help you do just that.How to Pay Off Your Student Loans


Public Service Loan Forgiveness (PSLF) Program

Under the PSLP Program certain student loans can be forgiven if you work in certain public service jobs for 10 years.

Other provisions of the program include:

  • You must make 120 on-time, full, scheduled, monthly payments on your Direct Loans. Only payments made after October 1, 2007 qualify.
  • You must make those payments under a qualifying repayment plan.
  • When you make each of those payments, you must be working full-time at a qualifying public service organization.

Only loans made under the William D. Ford Federal Direct Loan (Direct Loan) Program qualify, however you can consolidate other student loan types into a Direct Consolidation Loan to take advantage of PSLF. Only loan payments made under the consolidation will count toward the 120 payments for PSLF purposes – and none of the payments made up to that point.

If you don’t qualify for the PSLF, or if working in a public service sector job is not possible or desirable, then you will have to resort to dealing with student loan debts the old-fashioned way.

The rest of this article will focus on that exact strategy. Given the magnitude of student loan debts, it will be probably be worth dedicating a few years out of your life to paying off the debt. This is particularly true if your student loan debts are well above $30,000. It will be difficult to build a meaningful life if you’re saddled with $50,000, $100,000, or more in student loan debt. The monthly payment alone can eat up a disproportionate amount of your income. And the prospect of having to make that payment for a decade or more to be downright demoralizing.

Dealing with it then will necessarily be a multi-step process. Try these…

Cut Your Living Expenses to the Bone

The only realistic way to payoff a very large loan on a limited income will be keep your living expenses to an absolute minimum. It will likely require that you delay your entry into the TV version of the middle-class lifestyle. The best advice is to continue living the college lifestyle while you work toward paying off your student loans.

In order to keep your living expenses low, you may have to do one or more of the following, depending upon what your income situation is:

  • Rent. Live home with your family, rent a room, or share a rental arrangement with two or more room mates. Rent is usually the highest expense so it will have to be kept as small as possible. A sharing situation will also keep utility expenses very low.
  • Transportation. Buy a “beater” (a car that’s at least 10 years old and can be purchased for cash), develop a ridesharing arrangement, or use public transportation. A late model car is a luxury you can’t afford.
  • Food. The great majority of your meals should be prepared at home, and not taken in restaurants.
  • Entertainment Expenses. Must be kept to a minimum. Spending too much here will undermine your efforts to pay off your student loan debts. Focus on finding less-expensive ways to spend your time and energies.

Those are the basic expenses. It should go without saying that any major spending plans should be on hold until after your student loan debts been paid in full.

Increase Your Income – And Dedicate it to Your Student Loan Debt

This can involve taking a second job, or starting a side business. Whatever the income source is, it’s absolutely critical that the extra revenue is directed specifically into paying off your student loan debts. Under ideal circumstances, you should be able to live on one income source, while dedicating the other to paying off your student loans.

This will also have the advantage that the more time you spend working, the less time you will be out spending money.

Don’t Take on ANY New Debt

Earlier I mentioned putting major spending plans on hold until after student loans are paid. But this is particularly true in regard to any spending plans that might see you taking on fresh debt.

If you want to get out of debt, the single worst thing to do is take a new debt. Doing so will be a matter of moving debt from one pile to another – even if you are making progress in paying down your student loans.

Ignore Your Other Debts

If you do have other debts in addition to your student loans, you may have to ignore them while you concentrate on achieving the bigger prize of paying off your student loans. There’s only so much that you can take on, so you have to avoid allowing yourself to be distracted by other obligations.

Make the minimum payments on those debts, and concentrate any extra money on paying off the student loans. Once the student loan debts are paid, those other debts should be fairly easy to take out. This assumes your other debts aren’t crippling or larger than your student loans. For example, it makes sense to knock out high interest credit card debt before focusing on low(er)-interest student loans.

Dig In For the Long Haul

You have to accept the fact that paying off a large amount of debt may take several years. Exactly how long it will take will depend upon your income situation, your living expenses, how much money you have to dedicate to paying off the debt, and of course the size of your student loans.

You have to be realistic about how long it will take. That will be important so that you will have the proper expectations. For example, if you owe $50,000 in student loan debt, and you earn $40,000 per year, it will take five years to payoff the loan if you are able to pay $10,000 per year on the debt (and that doesn’t even account for interest, so it may take a few months longer).

It won’t be easy, and it won’t be quick – but it will be worth it. Once your student loan debt is gone, you’ll be able to finally move forward with your life plans. But you’ll be stronger for it because you will be armed with a college degree, and the experience of having overcome a massive obstacle in your life.

Have you considered what will be involved in making your student loan debt finally go away forever?

Published or updated March 30, 2015.
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{ 7 comments… read them below or add one }

1 Anum @Current on Currency

Finding an extra source of income really does help you stay on track with your debt payment goals – and helps you completely avoid “boredom spending!”


2 Kevin Mercadante

Hi Anum – That’s a huge advantage. I really think that having a second income is close to a necessity if you have large student debts. Otherwise you’ll have to take an oath of poverty to get them paid off. And you can only sustain that lifestyle for so long before you’ll abandon it for mental health reasons!


3 Isabella Kogut

I have heard the tip about buying a “beater” as a car while paying off student loans… but in reality, when you really think about it, it does not make sense. A beater car is more likely to break down and repairs can be pretty pricey, especially if you don’t have a mechanic you can trust to give you a great deal.

I would rather purchase a vehicle that is under warranty, that way those basic repairs that could cost you out of pocket expenses would be covered under the warranty. And if you have a car that you are paying off, assuming the payment isn’t a ridiculous amount, it is more worth it in the long run while paying off those student loans…


4 Ryan Guina

I think there are different meanings of the term, “Beater.” No one is recommending buying a piece of junk. I recommend getting the car inspected to make sure it is mechanically sound and will get you where you need to go efficiently. I have purchased several cars in my lifetime, including several “beaters.”

The least expensive was a $600 car I bought when I lived in England. It was small and relatively old, but it was very efficient. I drove it for the better part of a year and didn’t have any mechanical issues with it – all I paid for was gas, an oil change, and I installed a CD player and a couple small speakers. I sold it for roughly what I paid for it. The important thing was that I didn’t have any additional drains on my income. I was able to save several thousand dollars that year because I didn’t have several hundred dollars per month car loan and more expensive car insurance. It was also extremely fuel efficient, which was important because petrol is very expensive in England.

If possible, I recommend saving a few thousand dollars in cash, and buying a reliable and mechanically sound car that will get you where you need to go. If you can budget several grand for a down payment, plus several hundred a month, then you will be better off in the long run by using your down payment to buy a car with cash, then saving those few hundred dollars per month in a savings account in case you have repairs. Once you have a decent emergency fund, you can stop directing the additional several hundred per month into savings and use them to quickly pay off your student loans, other debt, or even invest. The quickest way to get caught up, or get ahead, is to reduce your fixed monthly expenses as much as possible.


5 Kevin Mercadante

What he said!

But seriously, a friend of mine who knows more about cars than I ever will told me “it’s always cheaper to repair your old car than to replace it with a new one.” Isabella, while I agree with the reliability factor of new cars that you cite, it is an expensive proposition to maintain.

New cars just aren’t cheap. If you buy even a modest new car for say, $25,000, you’ll have to come up with a down payment, of probably $5,000. Then you’ll have to make monthly payments that will be in the $400 range if you take a five year loan. That means another $5,000 each year. That won’t help if your plan is to get out from under large student loans.

And for what it’s worth, once you have the new car for two or three years, you’ll probably start to see the kinds of repairs that you were hoping to avoid by buying a new car. It’s very difficult to come out on top when you buy a brand new car.


6 Kyle

Student loan debt is a huge problem, with many not knowing where to begin … good on you for building a blueprint to help these kids out!


7 Pyper B.

This is a great article! Most people are so overwhelmed by the amount of student debt they have that they resort to paying the minimum payment just to avoid even looking at it. I will be making sure my children never have the kind of debt I have by helping them get scholarships, etc.


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