Paying off Student Loans Early: Helping Grads Swear Off the Four-Letter Word

student loan debt

Think about all the classes you’ve taken during your lifetime–whether in high school or college.

How many can you honestly say are applicable in helping you to navigate real life?

How about Intro to Logic? Modern East Asian Civilization?

Aside from being able to talk intelligently about historical events (think Tiananmen Square) or prove you know what a syllogism is, not much you’ve learned in classes like these relates to the tasks you do every single day (in most cases).

What would our lives be like if every high school and/or college student was required to take Personal Finance 101? (I know a little light bulb would have gone off over my head, especially if someone had shown me a compound interest chart at 20 years of age.)

The state of Americans’ finances

This stuff is no secret, but it bears repeating: According to a recent survey by GoBankingRates, 56 percent of that particular survey’s respondents have less than $10,000 saved for retirement, and 42 percent of millennials (individuals born between 1982 and 1993) have absolutely nothing saved for retirement.

According to CBS MoneyWatch, the average household credit card balance is at about $7,200, and in 2015, credit card debt as a whole across the nation had locked in at $60 billion–and that was two years ago. Unfortunately, since then, it’s only increased.

College graduates claim they’re stymied by student loan debt, credit card debt, car loans, and unfortunately, the list goes on. It’s no wonder millennials have no retirement savings, and why college grads feel like they can’t get ahead.

Anyway, since we’re led to fumble through the personal finance maze on our own (remember, Personal Finance 101 doesn’t exist) college graduates honestly don’t know which of their many financial situations to tackle first.

Paying off student loans? Save for retirement? Build an emergency fund? Do all three simultaneously? (The answer is yes… if you can!)

The crux of the conversation

Here’s what it boils down to: We need to teach college graduates how to handle student loan debt and treat it like the four-letter word that it is.

I work in higher education, with college kids on a daily basis, and they are amazing individuals. They talk about the things that matter to them: Family. Friends. Pets. Graduate school. Careers.

Sometimes my students will mention in an offhand way that they have student loans–but all of them think the loans are worth it because of the college education they’re getting that’s changing their lives.

I agree.

I will always, always be an advocate for getting a college degree, no matter the cost. Some experts claim that the value of higher education isn’t as much of a sure thing as it used to be. I wholeheartedly disagree. Your options are fewer–regardless of what field you’re interested in going into–without a college degree.

Managing the student loan debt coming out of college–and managing debt in general–is the part that we all have a responsibility to make sure college graduates understand.

Paying off student loans early

For the most part, I bristle when the media complains about the cost of college.

It’s an investment, people!

And it’s one that requires being smart–just like any other investment. Think about it–if a 50-year-old dumped every single penny of his robust 401K into one single stock fund with absolutely no diversification, would that be a good investment?

Probably not. When it comes to choosing a college, being smart about financial aid, applying for scholarships and paying back those student loans–critical thinking skills are all it takes.

student loans debt
Creative Images/

Boxed in for life?

There’s no getting around it. A lot of students have to borrow for college, and it’s also true that there’s legally no way to get out of paying back your loans. If you check out the table at, you can see that short of extreme disability or death; it’s really hard to get student loans canceled or discharged. Even in the case of bankruptcy, it’s tough. (The table even says only “in rare cases” could bankruptcy be an excuse to default on your student loans.)

When graduating with student loans, here’s what you need to know/consider when handling them:

Understand your loans.

Are they federal (government) loans? Are they private loans? Federal loans, funded by the federal government, are the least expensive of the two and have several advantages. The interest rate is fixed, whereas private student loans, which are funded by a lender, such as a bank, credit union, state agency or school, can have variable interest rates, some greater than 18 percent.

Federal student loans also offer income-driven repayment plans, while private loans do not.

Consider consolidating your federal student loans.

This can make them more simplified, with one monthly bill, and you’ll be able to switch any variable-rate loans you have to a fixed interest rate–always a good thing!

If you qualify, explore loan forgiveness options.

If you’re employed by a government or not-for-profit organization, you may be able to receive loan forgiveness under the Public Service Loan Forgiveness Program, which forgives the remaining balance on Direct federal loans after you’ve made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for that employer.

If you’re a teacher, the Teacher Loan Forgiveness Program can help you if you teach full-time for five complete and consecutive years in low-income school districts. You could be eligible for forgiveness for a combined total of $17,500 for certain federal loans.

For more information about loan forgiveness programs, visit

Paying off student loans early or as soon as you can after you graduate!


Look at it this way. College grads don’t usually have as much responsibility–no house payment, no kids yet, etc. It may be the easiest time to tackle student loan debt, right away.

Even if it means eating Ramen noodles some nights to ensure that extra payments go on top of the required payment, isn’t that worth it?

Tackle each loan, one by one. If you have several private loans, those can be a great place to start. Investment guru Dave Ramsey argues that money is “80 percent behavior and 20 percent math” and suggests ignoring the interest rates altogether and focus on paying off any smaller balances you might have.

Once the smaller balances are totally knocked out, you’ll feel the momentum to stay the course and keep motivated to tackle the bigger balances.

Ultimately, it boils down to this: Simply make as many extra payments, as much as you possibly can, as often as you possibly can.

Since I’m all about helping college grads, I realize that there may be non-college students reading this. If you’re a parent, please know that it is crucial–absolutely crucial–to teach finance at home, or if you don’t feel comfortable teaching your high school or college-aged kids, get someone with the skill set and know-how to teach your youngsters. (Or make sure they at least read a good personal finance book.)

But of course, along with other types of debt that college students encounter (credit card debt, car loans, etc.) teaching your kids about finances is another topic for a different day.

Melissa is a Midwesterner with a penchant for travel (the further away, the better!) and personal finance. Previously, she worked as a writer/editor for a gardening magazine and has done lots of writing and editing for publications. Now, she works in the admission office of her alma mater, Central College in Iowa. She has special interests in reading about finance and politics, and together with her husband, spends most of her time chasing after their two kiddos.

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