Like any big and nebulous problems, student loans can sometimes be so daunting that you get frozen into immobility even though you know you should be taking action. The reasons could be many: fear, lack of clarity, sense of now knowing enough, for example. The other big barrier, of course, is that unlike checking your social media feeds, or the news, there isn’t an immediate dopamine hit for your brain where you feel that pleasurable jolt of reward when you finish something.
To jog your thinking, and to help you get started, I collected a list of 18 different things that will impact your student loans, and that you can pick from based on your inclination, energy and bandwidth. Regardless of where you are or how far you have to go, starting to chip away at any one of these is guaranteed to reduce the inertia and provide you with that burst of energy – you will know right away that you’re making progress.
#1: Develop a summary picture
The simplest step is often the most energizing. Just getting a handle on the totality of your loans, along with all the minute details of how much you owe on each kind, can provide an immense and immediate release of energy. Get your federal loan data at NSLDS. Then download a free credit report at annualcreditreport.com. Between these two sources, it should be easy to create an itemized list of every loan, balance and interest rate.
#2: Check your balances
Been making extra payments? Just started repayments? or simply want to understand how your loan got to be how big it’s become? No matter what the question, taking a deep dive into any single loan to understand where it started, how the layers of interest piled up, and how various payments have been applied to your balance can be very instructive – I’ve learned surprising amounts of information just by tracing the course of a single loan balance.
#3 Monitor fees and charges
It’s tempting to just let the small and boring numbers in each monthly statement slide by. After all, you’re going to have to pay it all back anyway right? This approach can cost you big in any financial transaction, but particularly with regard to federal loans. Take a single loan, and review one year’s worth of statements to understand what fees and charges have been added to your account and why. It’s quite possible you’ll find an error or two. Getting those corrected can provide quite the high and motivation you need to get moving.
#4: Monitor interest charges
Similar to #3 above, but of greater weight: do the same kind of tracking an checking on the interest being charged on your loans. Just play with the math and hand-calculate for a month or two the interest you think you should be getting charged. Chances are, even if you don’t find any errors, you’ll learn a very valuable thing or two about how these calculations work. And that knowledge gained on such an intimate level will stand you in good stead in every area of credit, not just with student loans
#5 Automate a payment
Pick a loan with high interest rates, and put it on automatic debit. Typically, putting a loan on auto-pay should qualify you for a break in interest rates of even a quarter percent. All these dollars add up, and the actions should start to melt your balances faster then they would otherwise.
#6 Apply payments correctly
Have you been extra diligent lately and making payments of more than the required monthly minimums? Go, you! Do yourself just one more big favor, and call your servicer to ensure that all these extra payments you’ve been making are being applied to your outstanding principal, and not just lopped off your very last payments scheduled for the end of the loan.
#7: Prioritize loans for payment
If you are able to afford even a little bit more than your minimum monthly payment, and want to apply these towards student debt, take a minute to think about where to prioritize them. better still, take the master list (from #1 above), and prioritize them in order of highest interest rates first, or private or co-signed loans first. But make sure you have some strategy and some reasoning behind this. Not only are you more likely to do the right thing, but just asking these questions will prompt you to think about the larger financial picture and present you with more things you could be doing to benefit yourself.
#8 Use windfalls to reduce loan amounts
If you just got a tax refund, or an unexpected cash bonus at work, you can jump start your student loan repayment activity by applying some or all of it to your student loans. Just make sure you call your servicer and ask for the payment to be applied to your principal. Doing this will start off your journey on a pleasant, virtuous and self-reinforcing note, rather than on the negative energy of guilt or anxiety.
#9: Look at current refinance rates
While it may or may not be the right thing to refinance your student loans it will always be a good idea to have your finger on the pulse of current refinance rates. Especially if you have existing private student loans, looking to see if current rates are a significant step down from what you’re paying now could generate an immediate and recurring savings bump from every single loan payment once you refinance. If nothing else, your mind will stay alert to changes and the potential of saving more money when the time to refinance is right.
#10: Understand forgiveness
Forgiveness is truly divine, especially when it’s applied to your student loans. When you have a half hour to spare, take the time to gander through loan forgiveness options that you may potentially be eligible for. The big daddy is the federal loan forgiveness option, either through the Public Service Loan Forgiveness program (PSLF), or one of the older programs through flexible repayment plans. Getting forgiveness takes work (!) but the fruits can sometimes be hugely rewarding. Use the motivation of having thousands if not tens of thousands lopped off your big debt to get you moving.
#11: Organize paperwork
If there is one area in your life where paper work pays (other than your taxes), it must be your student loans! If you’re like me, then it’s likely your loan paperwork is spread out over multiple years of papers in multiple types of files as you moved through school, jobs, and homes. There’s nothing to make you feel productive quite like organizing the key parts of your student loan documents into a manageable shape. And the best part is, you’ll be able to pull these out in no time should you have a question or get down to developing a plan
#12: Track paperwork
Especially if you have federal loans, and are on certain kinds of repayment plans (income-driven plans), then you are required to submit certain kinds of certifications at least on an annual basis and sometimes more frequently. In fact, there can be quite punitive financial consequences of you don’t. There may be other documentation requirements for your private loans too. It’s a good bet that spending time to track what you need to submit, when and to whom, will pay off quite handsomely especially if you have any plans to seek loan forgiveness.
#13: Understand repayment plans
Federal loans have more than eight to ten options for your to repay your student loan. You’re usually placed on a 10-year default when your first gets into repayment, unless you chose a different one. But there are big consequences beyond just how much you’ll pay each month. So if you don’t know where to start on your student loans, do this: go the the government’s website here, and spend some time understanding what each one means. If it then makes sense for you to change your plan, you’ll have a solid basis for making that change
#14: Take a look at your benefits package
If you have a slow afternoon at work, and feel the urge to do something productive AND beneficial financially, review your employee benefits package if you haven’t already. More and more companies are offering student loan repayments as a perk and benefit. Understand how much you’ll get, and make the choices about which loans these payments get applied to thoughtfully. Then make sure you sign up ASAP.
#15: Get a side-gig
A surely beneficial application of nervous emotional energy spent on worrying about your student loans is redirecting that towards a side-gig or hustle that can reliably generate a few hundreds of dollars every month. Chosen carefully, and pursued consistently over time, these gigs can not only help you pay off money faster, but they can also strengthen your resume. Who knows – you might even discover a whole new career or entrepreneurial platform this way!
#16: Address other sources of financial stress
I read research recently that showed that when people are experiencing stress, especially financial stress, the impact could be as great as 12-13 point drop in their IQ – they literally have less brainpower to function with! If you’re experiencing any source of financial stress outside of your student loans, you’ll be able to add loads of mental firepower just by taking the time to understand these sources, and take action, ANY action, to start addressing them. This will give you a boost of self-confidence, and the energy needed to tackle bigger challenges.
#17: Address other sources of life stress
Financial stress is not the only kind of stress that can compromise your ability to function or solve problems effectively – health issues, a broken down car, any of these can have the same effect. So if you’re running down with nagging worries, hit the pause button to re-examine the sources of stress. Even if you can’t resolve the entire problem, taking any action deliberately and proactively will ease the stress and boost your energy and problem-solving abilities.
#18: Develop a loan pay-off strategy
Yeah, yeah I know what you’re thinking – you don’t need to write this down because it’s already burned in your brain. But even though the amount and the rough time frame might be floating around like a cloud inside your head, take the time to list out the steps you’ll take to pay them off, until you hit zero. List what actions you’ll take, what priority you want to follow in paying these off, what other options you want to explore, such as looking for a job that pays more money or a side-hustle, or finding refinance options. Having even a very simple written down strategy will yield huge benefits in clarifying your thinking, revealing areas where you don’t have information or clarity, or even just strategies that sounded good in your head but don’t look so hot on paper. You can revise this over time, or simply do it over every few months, but do it.