How to pay off student loans when you’re broke

  1. How to Pay Off Debt When You Are Broke
  2. Making debt repayment a priority
  3. Make more money
  4. The logistics
  5. Looking for debt relief? can connect you with a certified credit counselor for an expert opinion on your best option to getting debt
  6. 5 Ways To Pay Off Student Loan Debt With A Low Income
  7. 1. Change your mindset and get organized
  8. 2. Break up your big goal into smaller chunks
  9. 3. Choose a debt repayment strategy
  10. 4. Cut expenses, embrace frugality
  11. 5. Focus on earning more money
  12. Summary
  13. Read more
  14. 3 Tips for Paying Off Student Loan Debt Faster
  19. 25 Ways to Get Debt
  20. How to Pay Off Debt: The Debt Snowball Method
  21. 1. Start couponing.
  22. 2. Try consignment shopping.
  23. 3. Cut the cable.
  24. 4. Stop going out to eat.
  25. 5. Break up with your barista.
  26. 6. Visit the library.
  27. 7. Plan your grocery trips.
  28. 8. Avoid expensive hobbies.
  29. 9. Ditch the gym membership.
  30. 10. Find free entertainment.
  31. 11. Start a side gig.
  32. 12. Get a part-time job.
  33. 13. Sell the car!
  34. 14. Cut up your credit cards.
  35. 15. Use the envelope system.
  36. 16. Stop investing.
  37. 17. Ignore your broke friends.
  38. 18. Make a budget!
  39. 19. Tell the kids you’re on a budget.
  40. 20. Listen to The Dave Ramsey Show.
  41. 21. Ask for a raise.
  42. 22. Learn to say no.
  43. 23. Sell items on Marketplace or Craigslist.
  44. 24. Give more.
  45. 25. Take control of your money with Financial Peace University.
  46. The Broke Millennial’s Advice for Avoiding Student Loan Debt
  47. Choose the Right School 
  48. Consider If You Need College
  49. Apply for Scholarships
  50. Get a Job 
  51. Take AP Classes
  52. Opt for Federal Loans First
  53. Compare Private Loan Lenders
  54. Make Payments While You’re in School
  55. Consider Life Insurance if Borrowing Private Loans 

How to Pay Off Debt When You Are Broke

How to pay off student loans when you’re broke

Broke people can pay off debt, it’s just a little trickier.

It pains me to admit that I’m very acquainted with the experience of being broke. In fact, being broke and in debt was so exhausting to me that it motivated the start of my debt-freedom journey. A journey that I didn’t know at the time would take years to complete.

I’m a few months away from no longer owing unsecured debt credit cards and only owing on my student loans.

And, I thought this post would be an excellent opportunity to share some of the lessons I learned about paying off debt while being broke.

Hopefully, this will encourage readers who are either at the beginning of their debt-freedom journey or are currently dealing with a bump in the road financially.

Making debt repayment a priority

Paying off debt has to become a priority — even though you’re broke. It’s hard to focus when you’re broke because surviving is your initial priority. But, once you decide that debt repayment will play a role in what you’re doing financially, that sense of purpose will drive your financial actions moving forward.

I reached a breaking point where I was just tired of owing money to other people and I just wanted those extra people, and business entities my life. The constant phone calls, emails, and letters drove me crazy. But, the reality was that I could only focus on one thing at a time, and so that’s what I did.

So, I sat down and made a list of my bills from smallest to the largest amount and then looked at which bills were the most urgent and which bills I had to get my life as soon as possible. Once that was done, I focused on one thing.

Just one thing.

After creating a basic strategy for debt repayment, the next area of focus was to earn more money. Around this time  I had a conversation with my friend Kara Perez, from Bravely.

com and she said the following “You can’t out-frugal your debt” her observation about money really resonated with me, especially because she had paid off over $25,000 while earning an incredibly low yearly wage.

She was referencing her own debt-freedom journey while being broke and how eventually you just have to earn more in order to gain traction in your debt fight. Her comment continues to resonate with me because I had made that mistake.

I was painfully frugal because I was broke. But, many people, I missed the memo on the importance of earning more money. My habit of being thrifty was a great habit to have, but thriftiness while broke and in debt was only going to move the financial needle so far.

Make more money

It was time to begin side-hustling. In fact, I found side-hustling to be a very empowering process in my debt payoff journey. But,  earning more money also highlighted terrible financial habits that I was oblivious to because surviving financially left me very little time for deep introspection.

I was mentally and emotionally tired.

Emotional spending was a problem that I didn’t realize I had, and every time I earned more money during this stressful time I wondered where all of my money went? I was using my credit cards because I couldn’t, I was paying on my debt, but it felt my debt-load was still growing.

Managing my mindset became the most critical part of paying off debt when broke. Finally, after realizing that every time I ran to the mall to shop while depressed was because I was broke.

And it was going to keep me in the same financial situation. That realization created a huge shift in my journey.

  Becoming financially self-aware and relearning my financial habits was the most important financial skill set that any person looking to pay off debt while broke should develop.

The logistics

Now, to the more practical parts of debt repayment while being broke. You’ve created a comprehensive list of your financial priorities and know where you stand. Begin having conversations with your creditors and see if you can negotiate:

  • A lower interest rate — it’s hard to gain traction with payments if your interest rates are so high that you can’t build momentum towards paying your balance down.
  • Work on a payment plan that puts YOU first. In the past, I would always agree to negotiate terms that favored the company that I owed versus figuring out a payment plan that I could stick with and would benefit me in the long run.
  • Earn more — as mentioned before, it’s difficult to out-frugal your debt. Focus on earning more money with a side-hustle or changing your job. And, when you’re changing your job build in a raise by looking for a job that pays you more.
  • Get in the habit of making payments — no matter how small. Make paying on your debt a part of building discipline financially.

Finally, be kind to yourself. It’s cliche to say this but, your debt-repayment journey is a marathon, not a sprint. Currently, I’m working on the final $5,000 of my unsecured debt. It has taken a long time to get to this point, and I’ve learned a lot about myself along the way.

Unfortunately, I still have student loans, but I will only have one significant debt left to pay. And, I can use all of the hard-learned skills to kick that debt to the curb. I can’t wait!

Looking for debt relief? can connect you with a certified credit counselor for an expert opinion on your best option to getting debt

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5 Ways To Pay Off Student Loan Debt With A Low Income

How to pay off student loans when you’re broke

Is it possible to pay off your student loan debt quickly when you have a low income? Many college grads are burdened by thousands of dollars of student loan debt. With recent college grads carrying an average starting balance of $37,172, with a 6.8 percent interest rate you’d be looking at a minimum payment of around $428 per month on a standard 10-year plan.

When you have other important living expenses your rent or mortgage, groceries, or a car payment, it can be difficult to pay that minimum amount.

Sure, having a higher salary will certainly help, but you can still do this without a huge budget or income as well. Here’s how.

1. Change your mindset and get organized

The first thing you need to do is change your mindset and organize all your debts so you can get a clear picture of what’s going on. If you approach your situation with a defeatist attitude and assume it’s not possible, you won’t make any progress.

It’s important to realize that money isn’t everything when it comes to paying off debt and it’s not even the most important thing. Your mindset and habits are most important because you can earn six figures per year, pay off all your debt, and get right back into debt again if you don’t adopt better spending and money management habits.

Set an end goal for yourself to help you stay motivated and envision what you want your life to look when you’re debt free.

Then, start focusing on the numbers so you can find out exactly where you stand. It’s important to know who you owe, how much you owe, and what your interest rate(s) are.

2. Break up your big goal into smaller chunks

Once you’ve changed your mindset and have a full understanding of your debt situation, you’ll be ready to set realistic goals and break them down into smaller, more attainable chunks.

For example, if you have $45,000 of student loan debt and you only earn $35,000 per year, setting a goal to pay off your entire balance in 12-24 months may be pretty difficult and nearly impossible to reach.

However, if you say you want to pay down $10,000 per year or put at least $833.33+ toward your debt each month, that’s a more realistic goal that you can track easily. Once you hit one milestone, you can acknowledge your progress and focus on the next one.

3. Choose a debt repayment strategy

If you have a lower budget to work with, you want to make sure you maximize what money you do have to put toward debt.

This is why it’s important to choose a debt repayment strategy that works best for you and your current situation.

If you’re trying to pay off your debt quickly, you’ll need to properly allocate the extra payments you make. Generally, you can choose between the snowball method or the avalanche method for debt repayment.

With the snowball method, you focus on paying down the debt with the lowest balance first, then you roll your payment onto the next debt with the lowest balance.

For example, if you have five student loans, you’ll start working on the one with the lowest balance first.

The snowball method is great for staying motivated since you’ll see your progress quicker.

The avalanche method involves paying off the debt with the highest interest rate first in order to save you the most money in the long run. The interest you pay on your debt each month can cost you thousands of dollars over your repayment term.

If you knock out the loan with the highest interest rate first (the one that’s costing you the most money), you’ll most ly spend less money paying off your debt since you got rid of the high-interest loans quickly.

I would recommend the avalanche method of debt repayment if you have a lower income because every dollar you have to put toward debt is super important and can go further with this particular strategy.

4. Cut expenses, embrace frugality

It’s best to have a solid budget in place when you’re trying to pay down debt on a low income. Go through your existing budget or create a new one and pinpoint any expenses you can cut out or reduce.

See if you can cut cable or cook more meals at home so you dine out less. Maybe you can get rid of your gym membership or save money on clothing by shopping used and taking advantage of sales and coupons.

You can also try to lower your insurance premiums and refinance your debt to lower your interest rate. The list can go on and on but it’s important to commit to living well on less and adopting a frugal lifestyle while you try to pay off your debt.

Lowering your expenses and embracing frugality will really go a long way when it comes to freeing up money for you to put toward your debt.

5. Focus on earning more money

Finally, you’ll want to focus on earning more money in order to pay your debt off faster. Even though it’s more than possible to pay off a ton of debt with a low income, having a limited income puts a cap on how much you’re really able to pay each month.

When you try to earn more money, you can make progress even quicker. You can do this by asking for a raise, getting a higher paying job, or picking up a side hustle.

Side hustling might be the easiest option to act on quickly. You can use your skills and expertise to earn extra money around your full-time job. You can consider flexible side hustles freelance writing, virtual assistant work, driving for Uber, tutoring, babysitting, walking dogs, photography, etc.

When you do start earning extra money, be sure to avoid inflating your lifestyle and put all the extra money you earn toward your debt.

So using our example earlier, if you want to pay down $10,000 of debt per year and you can only free up $500 per month for student loan payments after reworking your budget and lowering your expenses, you can pick up a side hustle that allows you to earn $500 a month. That way, you can put $1,000/month toward your student loans even without being a big earner.


Paying off student loan debt with a low income is not impossible. However, having a clear grasp of your situation, stretching your budget, and taking steps to increase your income with a side hustle or a raise can certainly help.

Read more


3 Tips for Paying Off Student Loan Debt Faster

How to pay off student loans when you’re broke

There are so many stories about people who crushed astonishing student loan balances in incredibly short periods of time.

While it’s always impressive, it can sometimes feel unattainable if you’re not making a hefty salary or you’re contending with other financial obligations.

You may think, “Yeah, well if I made $120,000 a year then I too could put 40% of my salary towards student loans and be done paying them off in two years. But I don’t. So I can’t.”

Before you get all negative Nancy (sorry if your name is actually Nancy), here are three actionable things you can do to start paying off your student loan debt quickly that don’t require a crazy high salary, or for you to forgo other financial obligations.


Your student loan servicer told you exactly how much you need to pay per month. Some of your monthly payment goes towards the principal balance due, but a lot of it also goes towards interest. The interest is one reason it can feel it takes so long to pay off debt. You make that monthly payment but that principal balance just never seems to go down.

This is where paying more than the minimum due comes in.

Putting additional money towards your payment helps you dig debt faster because the extra money can be applied directly to the principal balance. It doesn’t even have to be a lot of additional money either. Start slow by rounding up your payment. For example, let’s say you owe $255 a month on your student loan. You’re going to round up to $260 or, even better, $300.

Paying more than the minimum due shaves both time and interest off your repayment journey. A true win-win.

One catch: you should reach out to your student loan servicer and tell them exactly where you want that extra money going. You don’t want it applied to future interest, you want it going to the principal balance of your loan.

Otherwise, the lender will just default to its standard way of applying your extra payment to your outstanding balance. If you have multiple loans, then you can even identify which loan specifically you want to receive the surplus.

You do want to keep other financial goals in mind while you’re paying off debt, which is why tacking just a little bit extra to your payment enables you to get aggressive with your debt while also balancing in short, medium and long-term financial goals.


You know when you’re on a bi-weekly payment schedule and then two times a year you get those delightful three paycheck months? Well, you can leverage the way the calendar shakes out to your advantage when paying off debt too.

Right now you’re paying $300 a month towards your debt. That’s 12 payments of $300 in the year. Simple. But instead, you’re going to split that $300 payment in half and every other week you’re going to put $150 towards your student loans. This ends up with you squeezing out an additional monthly payment each year so you’re making 13 payments instead of just 12.

Just be sure both installments of your bi-weekly payments hit your account before your bill is due. You don’t want to try using a clever hack and then accidentally end up late on a payment. Just in the paying-more-than-the-minimum-due situation, you also want to make sure your lender applies any surplus payments to your principal balance.

Possible catch: Not all servicers allow you to make a bi-weekly payment. If yours doesn’t, then you can challenge yourself to just making an additional lump-sum payment of $150 twice a year when you get you those three paycheck months. And if you get paid monthly or you’re freelance, you can just challenge yourself to putting even a little more on each monthly payment.


Finally, one of the most effective ways to pay off your student loan debt quickly is to reduce your interest rate by refinancing your student loans. Lowering your interest rate can save you hundreds to thousands of dollars and lots of time off your repayment process.

Refinancing sounds a bit odd as a concept. You take out a new loan to pay off an old one.

Except the strategy here is that your new loan could be at a lower interest rate, which means more of your monthly payment can go towards the principal balance.

It could also mean making a lower monthly payment if you aren’t trying to pay down your debt as aggressively and want to free up some cash flow for other financial goals.

Another perk of refinancing: it can help you consolidate all your loans together, so you’re making one simple payment. Plus, you can couple it with the other two strategies I mentioned and really do some debt slaying.

However, refinancing isn’t for everyone. You need to be gainfully employed, have a history of always making your student loan payments on time, a healthy credit score certainly doesn’t hurt. However, if you’re on an income-driven repayment plan because you struggle making your monthly payments, then refinancing may not be the best fit for you.

The catch: refinancing is only available as a private loan. If you’re refinancing a federal loan, then you’re turning it into a private loan and therefore are no longer eligible for any perks associated with the federal student loan program.

That may mean no income-driven repayment plan, no forgiveness programs, no deferment or forbearance. Although some private refinancing loans offer forgiveness programs, deferments and forbearance programs.

Ask the lenders your considering if they offer these benefits.


If you’re reading this while you’re still in college or currently in a grace period on your loans, then you have a great opportunity to reduce the overall balance of your student loan debt by making payments now.

The longer you wait to start making payments, the longer interest has to be accruing.

Once the interest capitalizes (fancy word for getting added to the principal balance of your loan), you’ve just increased how long and how much money it’s going to cost you.

You might be worried that if you start making payments in college, it will somehow awaken the beast and mean you have to keep making those payments each month. Generally, that’s not the case.

You can always confirm with your loan provider, but normally your repayment period will not begin until after you’ve graduated or left college. Making payments early doesn’t trigger some sort of repayment monster.

You could even just make one lump sum payment a year.

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25 Ways to Get Debt

How to pay off student loans when you’re broke

Paying off debt can be frustrating and confusing if you don’t have the right plan. For more than 25 years, Dave Ramsey has taught people a step-by-step approach to slashing their debt called the 7 Baby Steps. 

On Baby Step 1, you save $1,000 in a starter emergency fund, and on Baby Step 2, you pay off all your debt (except the house) using a method called the debt snowball.

How to Pay Off Debt: The Debt Snowball Method

  • List your debts from smallest to largest regardless of interest rate.
  • Attack the smallest debt with a vengeance while making minimum payments on the rest of your debts.
  • Repeat this method as you plow your way through debt. 

Look, Baby Step 2 takes a few months to finish for some people and a few years for others. So if you’re on this step and laser focused on paying off that last debt, it’s possible the grind is starting to become . . . well, a grind. Maybe you’re exhausted and feel it’s going to take forever to become debt-free.

Hold that thought, because we’re here to give you our top 25 ways to get debt so you can be debt-free even sooner.

1. Start couponing.

You’ve probably heard this a thousand times—but are you doing it? You can save a ton of money just by showing a coupon to the cashier. Just be sure you’re using coupons for products you already buy, otherwise you could end up overspending on items you’ll never even use. That’s how you end up with 10 bottles of spicy mustard sitting in your pantry.

2. Try consignment shopping.

Kids grow clothes at the speed of light (or so it seems). And let’s be real: It’s not worth it to go into debt for your 2-year-old’s ever-changing wardrobe.

Check out your local consignment stores that sell pre-loved outfits in good condition. If you’d rather shop online, no problem. Sites thredUP and Swap.

com are great resources to get adult and children’s clothing at a fraction of the cost.

3. Cut the cable.

Welcome to this millennium, where you can watch most of your favorite shows online. If you haven’t cut the cord yet, do it! Put that $100 cable bill toward your debt each month and watch just how quickly your debt snowball starts rolling.

4. Stop going out to eat.

We get it. Going to a restaurant or hitting up the drive-thru is so much easier than making meals at home.

But while you’re enjoying the freedom of not having to cook for those picky eaters, you’re spending way more eating out than you would by eating in.

Want a creative way to socialize and share a meal? Invite friends over for taco night instead of meeting up at a restaurant. And hey—if you want to splurge for guac, we’re not judging.

5. Break up with your barista.

If you don’t know where all your money’s going each month, we’re pretty sure your favorite coffee shop can find it for you. Brewing your own coffee at home is a simple way to save money fast.

6. Visit the library.

Remember libraries? They have plenty of books and movies you can check out—for free! Your wallet has never loved movie night more than it does now.

7. Plan your grocery trips.

Make a list and stick to it! Use the calculator app on your phone while you browse the aisles to make sure you’re sticking to your budget. Do impulse items always end up in your cart? Try ordering your groceries online and then picking them up curbside at the store. Oh, and don’t ever shop on an empty stomach!

8. Avoid expensive hobbies.

Do you really have $200 a month to spend on golf? Are you serious? But it’s not just the golfers out there who need to rethink their club dues. Do you spend a ton at craft stores but never get around to starting your project? Home improvement stores can also cost you several Benjamins in one visit.

9. Ditch the gym membership.

You can still go for a run outside—for free. Gather some friends and start a running club. Or do those fancy HIIT workouts at your local park. Listen, it’s a free country. Well . . . mostly.

10. Find free entertainment.

Put a spending freeze on your entertainment costs for a little while. This means no going out to the movies, concerts, mini golf, bowling or whatever you do for fun that costs money. Instead, challenge yourself to find free ways to stay entertained. Take the kids to the park, go for a walk or a hike, enjoy a free concert, or look for a free event in your community.

11. Start a side gig.

Starting your own business has never been easier! Do you have a knack for making things? Sell your products online. Are you an animal lover? Take up dog walking or pet sitting.

Do you have a good eye and a nice camera? Start taking on clients for photo sessions.

Christy Wright’s Business Boutique is a great resource to show you how you can turn that hobby into a serious money-making machine!

12. Get a part-time job.

Not into starting your own business? Then consider becoming a driver for Lyft or Uber. A pizza delivery job at night could also bring in extra money.

You can even deliver other types of food in your spare time by working for places Uber Eats or Grubhub. Sure, you’ll have to put aside your pride and give up some nights and weekends of downtime.

But that’s a small sacrifice for extra cash in your pocket.

13. Sell the car!

The average monthly payment for a new car is $554.1 That’s just outrageous! Think about how much faster your debt snowball could move if you threw that $550 at it every single month.

14. Cut up your credit cards.

Shred ’em. Burn ’em. Shoot ’em. You’ll never get debt until you stop making debt a way of life.

15. Use the envelope system.

When you pay with cash, you actually feel your money leaving your hands. Ouch! Nobody s that. People tend to spend less when paying in cold, hard cash. With the envelope system, you'll see that cash going down so you can keep track of how much you’re spending.

16. Stop investing.

Yep, you read that right. And yes, we even mean stop contributing to your 401(k). Right now, you want all your income to go toward getting debt. Once you’re debt-free and have saved three to six months of expenses in an emergency fund, then you can resume your contributions. By then you’ll be on Baby Step 4 and can start putting 15% of your income toward retirement.

17. Ignore your broke friends.

Stop trying to keep up with the Joneses! Remember, you’re living no one else now so that later you can live and give no one else. In 20 years, you won’t have a financial worry in the world while everyone else will still have car loans, mortgages and credit card bills.

18. Make a budget!

Budgeting should be easy and—dare we say it—fun! Use our free budgeting app, EveryDollar, and focus your money on what matters: day-to-day spending, those pesky debts and wealth building.

19. Tell the kids you’re on a budget.

When it comes to money, the kids can be a worse guide than your stomach. Be open with them about what you do and don’t have room for in the budget. And remember: Never be afraid to use that magic word no.

20. Listen to The Dave Ramsey Show.

Listening to the show will encourage you when you feel you aren’t making progress. Every day, Dave helps millions of people across the country find hope and make a plan for their money. Their successes will inspire you to keep moving forward. 

21. Ask for a raise.

What do you have to lose? Michael Jordan always says, “You miss 100% of the shots you don’t take.” Thanks, Mike.

22. Learn to say no.

Make it a new part of your vocabulary. Love it. Embrace it. Because when it comes to spending money, you’ll be saying it quite often.

23. Sell items on Marketplace or Craigslist.

One person’s trash is another person’s treasure. Dig through your kids’ rooms and the abyss of your closet to find things you can part with to make some quick cash.

24. Give more.

Wait a minute—give? Yes! Giving changes you. It changes your spirit. Make giving a priority in your budget, no matter what your income is, and you’ll feel a million bucks.

25. Take control of your money with Financial Peace University.

Financial Peace University is the proven plan that will get you the cycle of living paycheck to paycheck. Financial Peace is the membership that will teach you how to pay off debt, budget, save big, and give no one else.

And right now, you can try it with a free trial of Ramsey+!  You’ll get all nine video lessons that break down the proven plan—the 7 Baby Steps, plus other awesome tools and resources to help you get your money on the right track right now!

How fast can you pay off your debt? Find out with the Debt Snowball Calculator.

But if you’ve already had the opportunity to go through the class, maybe it’s time to lead others through it. It’s one of the best ways to stay gazelle intense (and keep yourself accountable). Take it from us: Watching others change their lives feels pretty darn good.

There you have it—25 ways to get debt and breathe fresh air into your debt-free journey. Try a few of these tips and see if they work for you. When you hit a wall and feel you’ll never figure out how to get debt, just keep working the plan! Over time, your dedication will pay off!


The Broke Millennial’s Advice for Avoiding Student Loan Debt

How to pay off student loans when you’re broke

Erin Lowry, founder of the blog, Broke Millennial, helps young readers learn about money and finances. Money was always something discussed in the Lowry household growing up, and Erin was surprised to learn that that isn’t necessarily the norm. 

We asked the author of Broke Millennial and Broke Millennial Takes On Investing to weigh in on advice for new borrowers and parents when it comes to paying for college and borrowing student loans. Here’s what she says: 

Choose the Right School 

When Erin was a senior in high school, her parents let her know she would need to pay for half of her college education. So, instead of choosing the most expensive school, she went to the college that gave her the most money in scholarships.

“I gave up my dream school, to live my dream life,” she says.

She also says to consider community college, which could be a money-saving option, especially if you can live at home. If necessary, you can borrow student loans for community college.

Consider If You Need College

Erin recommends to be realistic about your actual need for college and really look and examine what you want to do.

“Trade school is very a good option that is underdiscussed,” she says, pointing out trades are often a recession-proof job with a cheaper initial investment. 

Apply for Scholarships

Search for every possible scholarship opportunity, she says. And don’t stop your scholarship search once you get into college. Continue looking for scholarships throughout college. Erin points out that there are certain scholarships only available to upperclassman.

Get a Job 

If you can, get a job while you’re in school. Erin was a Resident Advisor her sophomore through senior years in college. 

Even if your earnings don’t seem much, every dollar you make it one less you’ll need to borrow. 

Better yet, get a job that offers perks, such as employer tuition assistance, skills and experience that can help you land a job after graduation or even something as simple as free meals. 

Take AP Classes

If you’re still in high school, take as many Advanced Placement classes as you can. Erin says she technically came into college as a sophomore. Completion of AP classes means less classes you will need to complete in college. 

If you’re already in college, be certain to choose your classes carefully. Meet with an advisor regularly. You want to be sure you are fulfilling your graduation requirements and that each class counts towards your degree. 

Opt for Federal Loans First

“Max federal loans as much as you can,” Erin says, if you need to borrow student loans. She points to more flexible repayment plans income and the opportunity for student loan forgiveness as reasons to choose federal loans.

Some federal student loans are also subsidized, which means the interest is paid by the government while you’re in school and during deferments. 

Federal student loans also come with more generous deferment options than private student loans. You can pause your payments if you lose your job or experience economic hardship.

Use our Student Loan Calculator to determine the monthly loan payment and total payments on your student loans, the loan amount, interest rate, loan fees and repayment term.

Compare Private Loan Lenders

If you do need to borrow private student loans, Erin suggests you shop around to find the best interest rate. has a list of the best private student loans available for undergraduate college students.

There are many things to consider when choosing a lender if you need to borrow private student loans. 

Is a cosigner required? If yes, do they offer cosigner release? These lenders offer cosigner release.

Be sure to understand the risks of borrowing any student loans, especially private student loans.

“The goal needs to be taking out the bare minimum to cover basics,” she says. 

Don’t subsidize lifestyle costs with student loans. Keep your expenses as low as possible during college. Don’t use student loans for unnecessary things, such as vacations, dining out, a new wardrobe, gadgets, entertainment or other unrequired purchases.

“Your future self will thank you,” she adds. 

Make Payments While You’re in School

If you are in a position to be able to work, make payments while you’re still in school, especially towards private loans, Erin says. She points out that even $50 per month can start to take down the overall cost and help interest from building up. 

Use our Student Loan Prepayment Calculator to evaluate the impact of making extra payments, showing you how much you save on interest by making extra payments and how much extra you’d have to pay to pay off your debt quicker.

Consider Life Insurance if Borrowing Private Loans 

“If you take out private loan and need a cosigner, read find print and know whether if the loan is discharged in death,” Erin says. If not, a borrower may want to consider term life insurance. Because in the unfortunate instance of death, your parents would be fully responsible for that loan. This could cause a financial strain, if they aren’t able to pay the debt. 

At, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.


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