How to Pay Off School Debt

For many students and recent graduates, the realization that they need to pay back the thousands of dollars they borrowed to fund their education doesn't hit until school is over and the first bill comes. The good news is that students with federal student loans have a variety of options that make repayment easier.

Instructions

1

Consider consolidating your student loans to lock in a fixed interest rate and reduce monthly payments.

2

Join an organization that qualifies you for loan forgiveness or grants that can be used to pay loans, like the Peace Corps, AmeriCorps or other volunteer organizations. Military service also provides student loan forgiveness.

3

Get a job that provides student loan forgiveness. For example, your loan may be forgiven if you teach or work in a low income area for a specified period of time. Hospitals often offer loan forgiveness for nurses and other medical professionals who attend their training programs. Many employers offer loan forgiveness for positions that have a shortage of applicants.

4

Remember to deduct your student loan interest when you file your tax returns, provided you meet income requirements for itemized deductions.

5

Invest extra cash rather than using it to pay off student loans if the interest you can earn is greater than the interest rate you pay on your loan.

6

Choose a payment plan that works for your situation. Federal student loans provide several options. If you can afford it, use the standard payment schedule, which offers a lower interest rate and a quicker payoff time than other plans.