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United Way Blog

Getting a Handle on Student Loan Debt

This year, colleges and universities are expected to award 1 million associate’s degrees and almost 2 million bachelor’s degrees. In the next few months, these new grads will be entering the workforce, eager to put their hard-earned degrees to work while struggling to overcome a mountain of debt.

Entering the workforce with considerable debt has become a common theme for graduates these days. According to a recent New York Times article, the average American borrower with a bachelor’s degree leaves college with $28,400 in student loan debt. For many people, this level of debt at the start of their career makes it difficult to afford the necessities, save for emergencies, buy a house, start a family or invest in their retirement. Here are three tips for getting a handle on your student loan debt so you can start getting ahead:


  1. Track your cash flow. Federal student loan payments begin six months after graduating from college to give graduates time to find a job after they complete their degree. During the six months before your payments are due, keep track of your spending. Do you have money left over at the end of the month? If so, how much? If not, are there any areas where you could cut back to save money for your student loan payments?
  2. Explore repayment options. Most borrowers follow the Standard Repayment Plan, which requires them to make equal monthly payments over a 10-year term. If you can’t afford your payments, you may want to explore other options, such as a graduated repayment plan, in which monthly payments start low and increase every two years, or an extended repayment plan, which allows student loan debt to be repaid over 25 years, making the monthly payments smaller. Keep in mind that you may end up paying more interest on your loan than you might under the standard repayment plan.
  3. Keep your loan in good standing. To qualify for alternative payment options, your loan must be current on your payments. If your loan is in default—meaning you haven’t made a payment in 270 days—you will have to agree, in writing, to make nine consecutive loan payments within 20 days of the due date. The amount of your payments will be 15 percent of your discretionary income, unless you ask for a hardship reduction.


For more information on managing student loan debt, visit United Way’s, a free and easy online tool that can help anyone become smarter about their finances, regardless of their income level of circumstance.

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