How to Pay Off College Loans

How to Pay Off College Loans


It is not unusual for students to graduate with a debt in the thousands of dollars. Education is big business for schools and the government. However, this leaves new graduates with a huge problem: how can college loans be repaid?

It took me more than 20 years to repay what I owed. I didn’t have the financial know-how to look after my money properly. The sad part is if I knew then what I know now I could have been debt-free in a much shorter time. The following information has been well researched and I hope it will help you shave years off your loan payments.


How to Pay Off College Loans?

  • Deferment vs Forbearance?
  • Get That Loan Forgiven
  • Lower Monthly Payments Using Consolidation
  • Save Extra Money While Budgeting
  • Income Based Repayment Plan
  • Raise Extra Money
  • Other Ways to Pay Debt Down Faster

What is the Difference Between Deferment and Forbearance?


  • Both Provide A Different Kind of Financial Help

A deferment or forbearance is a temporary stoppage of your loan payments. Specific conditions must exist before permission is granted. Generally speaking, no interest needs to be paid during deferment periods. However, there are some federal loans where this does not apply. The interest is then accrued and added to the principal (the remaining amount). So be careful when checking this out.

On the other hand, forbearance can be a suspension or reduction of payments. In this circumstance, the borrower is required to continue paying the interest in both cases. In the case of suspended loans, it will increase the total amount owed. So it is very important to know exactly what you have before negotiating.

  • Short Term Solution That Works

These options are a temporary solution for people who are unable to make loan payments on time. It may be due to financial difficulties, medical expenses or a change in employment. There are a few other specific cases as well, for example, a student doing their medical residency etc. The good point is it will provide you time to find a job or earn more money. The downside is it will take longer to clear your debt.


College Debt Forgiveness



  • What is it?

This refers to the cancellation of all or part of the college debt. There is different terminology depending on the type of loan issued: loan forgiveness, loan cancellation and loan discharge. Be certain to determine which one you qualify for. They do vary somewhat. For instance, in one case you may need to report the amount originally borrowed for income tax purposes. In others, it is not necessary.

  • Have You Won The Lottery?

There are specific guidelines as to who is eligible for these kinds of programs. One common example would include loan forgiveness for employment in a public sector job. Let me explain how it works in a little more detail. Take the Federal Perkins Loan Program cancellations. They may apply if you have a job in a specific field.

  1. Nurses
  2. Medical Technicians
  3. Family or child services worker
  4. Teacher
  5. Volunteer in the Peace Corps
  6. Member of the US Armed Forces (certain cases)
  7. And so on ….


This is like winning cash. The way it works is a percentage of the loan will be forgiven for each year employed. The actually figure depends upon the type of service you are engaged in doing. However, these are not the only people that can benefit from forgiveness. So it is important to visit the relevant government sites.


How to Consolidate College Loans

  • Combine Everything, Pay Less Monthly

Consolidation is the process of combining all loans into one single loan. This is done by contacting your lender to work out the details and design a repayment schedule. There is no application fee when completed directly. However, private companies will charge a fee. I would recommend not using one.


  • Pros & Cons
  1. + simplify’s loan repayment – one loan & one monthly payment.
  2. + lowers monthly payment by extending the length of time to repay.
  3. + may give you access to income-driven repayment programs or forgiveness.
  4. + switch to fixed interest rates.
  1. – could make more payments and pay more interest.
  2. – may lose borrower benefits/credits associated with the original loan.
  3. – loans cannot be removed (old loans no longer exist).

The application can be filled out online at student However, I would strongly recommend talking to an expert consolidation servicer before committing so that you are fully aware of the benefits and consequences and receive the best results possible.


Make a Monthly Budget


A budget is a financial plan that helps you keep track of your money so you can make informed decisions on what to do with your income. It sounds complicated but really isn’t. As a matter of fact, if you are like me you may even enjoy doing it as you watch your debts being reduced and savings grow. Here are a few questions to think about while you are preparing a suitable budget plan.

  • What is the time span of your budget?
  • What tool will you use to manage it?
  • How much income will you have coming in?
  • What are your fixed and variable expenses?
  • How much will you save for emergencies?
  • Does your budget balance? If not, what will you do?
  • Have you set aside time to maintain and update your budget?


Income Based Student Loan Repayment Plan

This is another good alternative. It can provide relief to those who are finding it difficult to meet financial obligations. It resets your monthly payments at an affordable amount based on your income and family size. There are four different plans to be considered.

  • Revised Pay As You Earn Repayment Plan
  • Pay As You Earn Repayment Plan
  • Income-Based Repayment Plan
  • Income-Contingent Repayment Plan

The payment amount is a percentage of your discretionary income which is calculated using a certain formula. It varies under the various plans but is somewhere between 10 to 15%. There is a possibility that your monthly payment may be as low as $ 0 /mth.

The term is from twenty to twenty-five years (extended from 10) and different eligibility requirements are in effect for each plan. Information must be updated each year. It may also be done any time your economic situation gets worse. This means that your monthly payments could change over time.

It is important to speak to your loan servicer before applying and the application can also found online. Remember that this option will lower your payments but the time it takes to pay off the loan is longer. In some cases you may still be required to pay income tax on any amounts forgiven.


Ideas to Earn Extra Money

Once you have formulated a budget and determined what your loan payments will be each month, you can start thinking about earning extra money. The first thing you should have done ( with the budget) is identified areas to cut back on with spending. For example:

  • Cancel cable TV and use Netflix instead.
  • Stop eating out at restaurants.
  • Going on a spending fast.
  • Cut out the bad habits i.e. alcohol, cigarettes.
  • Etc.

Secondly, why not look around and see if you have anything to sell. There are a number of ways that you can sell personal items on and off the internet. A few of them are as follows:

  1. Yard Sales
  2. Advertise on Craigs List or the classifieds.
  3. Use a form such as eBay.

Lastly, get a second job. Many folks take on a part-time job to save and put towards the debt. You can also find online work which may fit into your schedule better. There are companies such as UpWork and Fiverr where you advertise the type of work you want to do. Freelance work such as editing, writing, making videos and more.

I would also recommend you consider a work from home business. However, be cautious with this approach. I strongly recommend you go this route only if you are presently working and have a little money saved. Because it takes at least three months before making the first sale and for many, it takes a year or more for a consistent part-time income.

The beauty of having an online biz is you can eventually leave your regular offline job and the earning potential is unlimited. However, it is like any business. You must put in the time and effort to succeed and you need to choose a reputable company to learn from. So do proceed with caution here.


A Few Awesome Tips to Pay Down Debt

  • Educate Yourself – Understanding loan jargon and the various rules, requirements, and processes will assist you in making informed decisions which in the long run will benefit you greatly by reducing the interest paid.
  • Set Up Automated Payments – The very first thing you should do is automation. Meeting deadlines is very important for your credit rating and it means there will be less worry. You can focus on the positive.
  • Make Prepayments – Whenever you have some extra cash saved put it towards the loan. Prepay as often as possible. This will reduce the length of the loan and interest.
  • Leverage Home Equity – For those of you who have a home or condo see if you can consolidate the home and student loans. It will result in one payment, maybe with low interest and increased cash flow.
  • Be Responsible – Never miss a payment. Stuff happens in life. If for some reason you can’t notify your lender right away and negotiate a solution. This will be very important for your credit rating later in life.
  • Set Smaller Goals – It helps to look at a smaller picture. Instead of focusing on the large amount, say 60, 000, concentrate on smaller periods of time and goals. For example, this month I’ll set my goal at $ 500.
  • Ask For Help – These days it is becoming more acceptable to ask for help. If you are getting married or have a birthday ask your friends or loved ones for some cash towards the debt in lieu of a gift. Ask your employer for student loan assistance as a benefit.


I really enjoyed researching for this article. You can find much more detail on some of the government sites. Of course, if you are interested in making extra money working from home, please take a look at Wealthy Affiliate or the other reviews on my website. As always, if you have any questions or comments concerning this topic please leave them down below. Thanks!

10 thoughts on “How to Pay Off College Loans”

  1. OMG!!! This Blog is fantastically sensational!!!!
    Very thorough and professionally done. It is very engaging and well-worded.
    Extremely educational!

    I did not know what deferment or forbearance meant prior to reading this Blog. I like at the end how Wealthy Affiliate was smoothly slipped in as a way to earn extra money. I want to read more from this author!

    Great job!!!

  2. This is great advice, thanks for sharing! My wife and I combined currently have a little over $40,000 in debt. I graduated this past May. It’s very draining to have the first $40,000 saved going right into paying off debt.

    Your list has a lot of great tips I’m already using, but one in particular I haven’t tried yet. Consolidation. I’ve been hearing recently that refinancing and consolidating loans can make a huge difference in saving money and paying off debt.

    I actually found one called Credible because I am also a blogger, and I have found that affiliate programs for refinancing companies can pay extremely well. I just don’t have enough knowledge yet to share the best ideas on the subject.

    Do you know of some debt consolidation companies that are really good, or do those fees kind of reduce the value?


    1. Hi Jordan

      Thanks for your question. I understand your situation because when I was younger I also had around 40,000 in student loans to pay off. I wish I knew then what I know now.

      I can’t speak for the States but in Canada we usually go to a bank to consolidate. They are regulated by the government so it’s as trustworthy as can be. Also the interest rate is usually much lower than other places.

      For example, credit card rates are around 20% here. A bank credit line is around 8% but some banks will consolidate for as low as 3%.  There are some other factors too that determine the rate.

      In the past I have consolidated onto a personal credit line (no credit check and at 8%). I know some professionals that get very low interest rates at banks but they need to go through a lengthy application process.

      In your situation, I would find a reputable professional financial advisor first. They will be able to advise you on where to consolidate in your country. It maybe a bit expensive but getting advise from a trusted professional will save you money in the long run. 

      I had a quick look at Credible – thanks for that information. It looks interesting. Student loan refinancing is around 4.5% – make sure to do your due diligence!

      Best regards,


  3. I am really glad you are getting the word out on student loan debt and how to effectively pay it off. This is such a huge burden for so many people coming out of college. My kids are teenagers and are a few years away from going to college. My wife and I have really talked with them a lot about choosing a career path that will help them along and also allow them to payoff any debt as soon as possible.

    The fact that you had 20 years worth of debt is really scary. I do know some people who have had enormous amounts of debt and it makes me wonder if it was worth it. I also know people who have “hit the lottery” as you said, and work in an industry that will pay the loans for them under certain conditions.

    Unfortunately, this is the time we live in and I don’t see the price of college going down any time soon. It is much better to have a plan ahead of time. You have outlined some excellent strategies here and I really enjoyed reading your article. Thank you and keep up the good work.

    1. Hi Steve,

      Thanks for the great feedback. What a way to start off life with a huge debt! I personally think education should be free. It is an investment in our society’s future. Everyone needs a job and they can pay it back through taxes after joining the working world.

      I think your kids’ are lucky to have parents who care about their financial future. Another suggestion I have is to encourage them to use some of their savings to invest. There is a program I researched called Fundrise. Folks can invest as little as $500 into real estate. If I was able to do things over that is what I would do, become a professional investor.

      That’s what most of the truly financially secure folks do. Even Mike Dillard (who made his initial wealth from internet marketing) is doing it and Anik Singal of Lurn Nation. I think introducing young people to the concept through a service such as Fundrise could make a big difference to their future financial well-being.

      Thanks again for taking the time to read my post and comment. It’s much appreciated.

      Best regards,


  4. Hi, you are right about debt: get out of it out of as quickly as possible. It is too depressing finishing college with the weight of debt on your shoulders. I think once you are in debt, there is a snowball effect and it is hard to get out of it. 

    Credit card companies make it so enticing these days to consolidate debts on an 0% interest deal.Sticking to a strict budget is hard but worthwhile.

    1. Hi James,

      I agree totally.

      Another thing that happens in Canada is the credit card companies slowly but surely increase the interest rates on the 0% interest deal – so before we know it we are paying up to 20% interest.

      Better not to have any “bad “debt but good debt is s different story. Borrowing to make money through sound investments such as real estate like professional investors do is smart.

      I think the universities & colleges are doing a real dis-service to society as a whole by charging outrageous amounts for education. The free education model is available in several countries around the world and works very well.

      Thanks for your great input!

      All The Best,


  5. Hi Kewl,

    Thanks so much for this post. It is very helpful as I still have some student loans to pay back and it can be a real pain. I was beginning to think, will this loan ever get paid. But reading your post now, I have some brilliant ideas on how to go about it.

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