Money Talks, So Should You

3 smart ways to pay back student loans

Gerri Detweiler
by Gerri Detweiler, Dimespring Contributor  (@gerridetweiler)

The tens of thousands of dollars in student loan debt that many borrowers owe can take years, or even decades, to pay off – and that’s if you earn enough to make the payments. No wonder many graduates feel overwhelmed, or even hopeless.

But finding a way to get on top of your student loan debt is crucial. Ignore it and your balances will just continue to grow. You may even find yourself dodging debt collectors. So I’ve got three homework assignments for you to tackle to get your student loans on track and to get out of debt. They may not exactly be fun, but the payoff can be bigger than any “A” you earned.

READ: Good student debt, bad student debt

1. Your first homework assignment: If your payments on your federal student loans are too high to handle, look into options for reducing them:

• Find out if you qualify for The federal government’s Income-based Repayment Program (IBR). If you do, your payments may be reduced to as little a zero, depending on your financial situation. Even better, remaining balances may be forgiven after 10 or 25 years, depending on the type of work you do. The guidelines for IBR have changed recently. If you didn’t qualify in the past, checking out this solution again may be worth a second look.

• Loan cancellation and repayment programs for those who work in public service jobs. Like the idea of having your loans completely wiped out – without having to make payments for a decade or two? You may have to dig to find out if you qualify, but you’ll feel like you struck gold if you do. The list includes teachers and child care workers as well as law enforcement and those who serve in the Armed Forces. If you work in healthcare, you may be eligible for loan repayment through the National Health Services Corp, provided you are willing to work for awhile in a high-need community. Start your search for cancellation and repayment programs at Student Loan Borrower Assistance.

• Individual schools may offer loan repayment assistance programs. For example, Yale University’s Career Options Assistance Program (COAP) offers loan repayment assistance for law school graduates with qualifying income and debt levels. Eligible participants may practice law in lower-paying government or public interest law practices, for example. Other law schools also have similar programs.

READ: How to win the scholarship game

2. Your second homework assignment: Get out of default. If you have fallen months behind on payments, getting out of default should be priority No. 1. If you don’t, you may risk wage garnishment or other aggressive collection measures. How do you get out of default?

• Let the federal government help you. The Consumer Financial Protection Bureau’s new online guide will prompt you to answer questions about your student debt, and provide basic information about options that may help.

• If your federal student loan has been assigned to the Department of Education’s Default Resolution Group, visit for information on rehabilitating your loan. You must be offered a payment plan that is reasonable and affordable. If you can’t manage the first plan offered, insist on one you can afford.

READ: Student debt: Where you attend college matters

3. Your third homework assignment: Know your rights, and exercise them. Collection agencies must follow the federal Fair Debt Collection Practices Act when collecting student debt.

• If they break the law, by threatening you or calling you repeatedly just to harass you, for example, contact a consumer law attorney with experience in student loan issues. This guide from the Federal Trade Commission describes your rights when debt collectors call.

• If the collection agency is breaking the law, the attorney may help you at no cost. Collection agencies are required to pay your attorney’s fees if they break the law. An attorney may also be able to tell you if an older private student loan is outside the statute of limitations, meaning you can’t be sued for the debt. That, in turn, may help you negotiate a reasonable payment plan, or even a settlement (where you pay less than the full balance to resolve the debt). The truth is, your education doesn’t end when you get your diploma. Finding a way to get your student loan debt back on track may be harder than any course you took in school. But this is one financial lesson where you simply can’t drop out.

Related video

Janet Bodnar, deputy editor of Kiplinger’s Personal Finance magazine, explains that there are ways to get a reprieve if you need it -- as well as other options available to you if you cannot keep up with your student loan payments.

Gerri Detweiler loves to answer credit questions, which she does as Director of Consumer Education for and host of Talk Credit Radio, a weekly radio program. Detweiler has been interviewed for more than 3,000 news stories on credit topics and co-authored five books, including "Reduce Debt," "Reduce Stress: Real Life Solutions for Your Credit Crisis" and "Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights."