The Blog

Paying Down Student Debt

After graduating, part of providing for yourself may include repaying your student loans, which can be a big responsibility. 

70 percent of graduates hold student loan debt. This means that millions of graduates are unable to build savings, buy a home, save for retirement, or get ahead in life.

This is especially true for women. According to a 2021 AAUW research report, women hold nearly two-thirds of the total student loan debt. The gender wage gap doesn’t help when you finally graduate and need to start making loan payments. 

This can make paying off your student loans feel way too far away or even impossible.

However, the news isn’t all dire. 

With some thoughtful planning, you can make your student debt payments less painful.

Understand Whether It’s High Interest (Above 5%)

The first step involves understanding the type of student loans you have. 

Understand how much you’re required to pay in terms of balance, repayment stipulations, and interest rate. This will help you make a sound repayment plan you can stick with. 

The standard advice is to pay high-interest loans first to lower the amount of interest you pay over the life of the loan.

Consolidate Debt to Try to Get Lower Interest Rates

If you have student loans with an interest rate higher than 5 percent, consider consolidating them.

Debt consolidation is a method that makes repaying your student loans more manageable and possibly less expensive. It involves combining multiple loans at an interest rate that reflects the average pay rate across all your loans.

After consolidating, you’re left with one payment to one lender every month

There’s no minimum amount to qualify for debt consolidation and no maximum amount that can be consolidated. Also, you’re offered multiple repayment plans.  

Can Invest While Paying Down Low-Interest Debt

While student loans are a pain to deal with, throwing every extra dollar toward your student loan debt might not always be the best approach. 

It can be more beneficial to pay down low-interest debt and focus on investing for the future.

In some scenarios, you can make more money through investing than what you’d save in interest by paying off loans early. With the power of compound interest, time is the one integral factor you need on your side.

So, what should you invest in? Warren Buffet, one of our generation’s most successful investors, advocates for the S&P index fund for beginner investors.

The S&P index tracks 500 of the largest companies in the United States. While there’s always some risk when you invest in the market, the S&P index has managed to gain value in 40 of the past 50 years, with a 10 percent annualized return

If you’re unsure where to start, a financial advisor will help you pick the right portfolio for your financial goals.

Create A Budget for Debt Paydown Every Month

Student loan payments are taxing enough, so you certainly do not want to add underpayments or missed payments fees. 

A budget that includes student loan repayment will make you more mindful of where your money goes. When you stick to a monthly budget, you might even come across “extra” money you didn’t know you had. You can then plan to allocate the extra money toward paying off your student loan.

Once your budget is done, consider autopay. Instead of sending payments manually each month, most lenders allow you to arrange for them to be automatically sent from your bank account. Some even offer small rate discounts for autopay plans.

Create Additional Sources of Income

Your job shouldn’t be the only source of income, especially when you’re burdened with student loan debt.

One of the best strategies for paying off student loans quickly is to make more than the minimum payments. Side hustles can help you do that.

When you get money from your Uber or Airbnb side hustle, put the funds towards reducing your debt with extra payments or a bigger payment. This will decrease the principal balance you owe, thereby reducing your interest and the outstanding amount you have to repay.


It’s easy to discuss ways to pay down your student loan debt faster, but the hard part is actually doing it.

The easiest way is to tackle one step at a time and stay motivated. Yes, you’ll likely need to make some short-term sacrifices to be debt-free, but you’ll reap the benefits once you accomplish your goal.