Introduction to Repayment Strategies: How to Best Pay Off Student Loans

Debt being erased through repayment strategies

This website has already discussed strategies that anyone can use to save more money to devote additional cash to student loans. In addition, the blog has also detailed how anyone can earn extra money from side-hustles so that additional cash can be used to pay down student debt. However, student loan success requires more than simply saving money and earning extra cash. Indeed, once you have additional money available to pay off student loans, you need to formulate a student debt repayment strategy that will ensure you pay off your student loans as efficiently as possible.

Many student debt repayment strategies will not work for everyone, since not all student loans are created equal. Indeed, many borrowers have different individual student loans, and these loans have vastly different terms. Interest rates can vary greatly from loan to loan, and repayment options on individual loans are usually different as well.




My own personal story is instructive on this point. I personally had dozens of individual student loans that comprised the $197,890.20 in student debt I eventually paid off. Some of my student loans were issued by private banks, but most of my student debt came from the federal government. The interest rates on my student loans ranged from 3.25 percent to 7.8 percent. In addition, my government student loans were eligible for income-driven repayment plans, whereas my private student loans were not eligible for this benefit. As can be seen with my own personal experience, all student loans have different interest rates and repayment options. Indeed, I am sure that many readers have different student loan situations from myself, and because of these differences, no one repayment strategy will work for everyone.

The “golden rule” of student loan repayment of course is that you should pay off the student loans with the highest interest rates first. This is the one universal truth about student debt repayment, and I am sure that everyone would agree that this strategy should be implemented by all borrowers. However, it might not make sense to devote extra money to student loans so that other financial objectives can be achieved. For instance, it might make sense to save money in an emergency fund rather than use extra cash to pay off student loans. In addition, it might also be wise to use savings for a down payment on a property rather than devote this money to student loans. As such, even this “golden rule” of student loan repayment might not apply to you, and these considerations must be assessed when deciding on a student debt repayment strategy.

In addition, it might make sense to refinance your student loans, and seek totally new terms for your student debt. Indeed, refinancing companies are currently offering amazing rates for student debt that are sometimes two to three times better than the terms people currently have on their student loans. Of course, refinancing can impact the ability of borrowers to remain eligible for income-driven repayment plans, but refinancing is an option that must be considered when weighing student loan repayment strategies.

Furthermore, as already briefly mentioned on this website, some individuals in public service might be eligible for student loan forgiveness after a set period of time. Moreover, income-driven repayment plans ensure that many borrowers only need to devote a set percentage of their income to student loans each month, and after a certain number of payments, the remaining debt is forgiven. Only individuals with certain income and vocational situations benefit the most from these programs, but these considerations also influence strategies one might implement to pay off student debt.

Furthermore, there are some ways that you can have the entirety of your student loans forgiven by participating in certain programs. For instance, individuals entering the military are eligible to have a set amount of their student loans forgiven as a reward for their service. In addition, lawyers, teachers, AmeriCorps members, and other professionals can also participate in certain programs that promise student loan forgiveness for a set amount of service. The availability of such programs should also be considered when assessing a student loan repayment strategy that is right for you.

As the above examples illustrate, in order to best pay off your student loans, it is not enough to merely save money and earn extra cash through side-hustles. One also needs to have a solid student debt repayment strategy in place so that you can make the most of any additional money you have, and take advantage of a variety of programs available for student loan borrowers.




The next series of articles on this website will discuss repayment strategies that everyone should consider when paying off student loans. The posts will discuss refinancing options, repayment plans borrowers should consider, when other life goals should take priority over student debt repayment, and a number of other topics. The articles will illustrate how anyone can use the money they save by following previous suggestions on this website to most effectively pay off student loans.

It should be noted at the onset that not every article on repayment strategies will be applicable to each reader. Every student loan borrower has a different situation, and some strategies will only be effective for a minority of borrowers. However, the goal of this series of articles is to empower everyone with student loans to make the best decisions on how to most effectively pay off their student debt.