Tackling Student Debt

student with calculator

Is there a new college grad in your family? Congratulations! Or perhaps you’re well into your post-college career but still paying off loans. No matter the situation, tackling student debt can be a big undertaking. But with good decisions and smart budgeting, paying off student debt can be manageable. Here are five tips to help you on your road to financial freedom.

1. Know your loan

There are many types of student loan debt, including Federal Direct Subsidized loans, Federal Direct Unsubsidized loans, and private loans. A key distinction of Direct Subsidized loans is that the loan does not start accruing interest until the borrower enters the repayment period (typically after leaving college).Other loans may be accruing interest even while you are still in school. It’s important to stay on top of managing repayment, or else your interest may snowball into a more considerable amount.

2. Take advantage of the pause

The Department of Education paused federal student loans during the COVID-19 pandemic. The move suspended both payments and interest. The pause has been extended through December of 2022. If you have outstanding debt on federal loans, there’s never been a more opportune time to get ahead, as the pause on interest could help you pay off the balance faster.

3. Educate yourself on the downsides of Income-Based Repayment plans

An Income-Based Repayment plan is an option to have your monthly loan payments recalculated based on your income. While this could help lower your monthly payments, the big picture is the most important. Lower monthly payments could result in your staying in debt far longer while paying more total interest. In some cases, Income-Based Repayment plans won’t outpace the rate of interest, causing your total balance owed to keep increasing over time, putting you further in debt. A lower payment per month is not always a good thing in the long run.

4. Watch your loan servicer closely

Federal loans may be distributed by Uncle Sam, but the repayment is managed by third-party loan servicers. In some cases, they may make changes to the repayment structure without much warning. Keep an eye on your communications and payments for any changes. Log in or contact your loan servicer to find out about any changes that occur and make sure you know how they will affect your financial plans. Make sure you understand how your payments are allocated toward principal and interest. The last thing you want to do is keep making payments without knowing how they affect your balance.

5. See if you qualify for Public Service Loan Forgiveness (PSLF)

While PSLF has been around for years, there were key changes made last year to the eligibility rules and the criteria, making it easier to get qualified for student loan forgiveness. Public service workers include teachers, firefighters, nurses, military, those who work for some non-profits, and many more. If you are a qualified public service worker under the PSLF criteria and have made at least 120 qualifying student loan payments, it may be possible for your remaining balance to be forgiven. If someone you know sounds like they may be eligible, encourage them to look into it. Visit studentaid.gov to find out more about PSLF.


If you or someone in your family has plans to enter college or a qualifying vocational program, you could reduce or eliminate the amount of student debt in the future by acting today. A 529 plan is a tax-advantaged investment account designed to encourage saving for the future higher education expenses of a beneficiary you choose. We can help you get started. Contact us or visit a branch today to get started!

Maybe you just want to make sure you never miss a payment. We can help with that too! Log into your Online Banking experience and set up automatic payments to the most common student loan servicers with Bill Pay!


Sources: Federal Student Aid, Federal Trade Commission, Consumerfinance.gov, U.S. Dept. of Education

The material and information on this page is for general information purposes only. You should not rely upon the material or information on this page as a basis for making any financial, business, legal or any other decisions.

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