How to Budget for Student Loan Payments


The annual cost of college education has risen by 130% in the past 20 years, according to the College Board, so it’s no surprise so many of us have student loan debt. Finding out if you can afford your student loan payments is an important preliminary step, but making the payments happen can prove even more challenging. These tips can help ensure you make your payments without sacrificing the other expenses in your life.

1. Explore Your Options

Look into student loan repayment options that suit your lifestyle. In standard repayment, you have a set amount you pay monthly over a period for 10 years, which can be great if you get a somewhat well-paying job right out of school. Graduated repayment may be better for you if you know it will take some time before you rake in the big bucks. There are also extended options, income-based repayments and even loan forgiveness — so it’s a good idea to consider your lifestyle, future goals and the benefits and disadvantages of each before you decide on a repayment schedule.

2. Stay Organized

No matter what your situation is, being organized will maximize your options and your funds. Keep track of your loan information before you even graduate and take your exit interview seriously so you benefit most from any available counseling. Once you graduate, it’s important to keep track of your spending and create a comprehensive budget so you know exactly what your income is, what your expenses are and what you can afford to repay.

Knowing where you stand and having a routine for your finances can make getting out of debt a little easier. It’s a good idea to also build an emergency fund in case anything were to go wrong so you do not get behind or worse, default on those student loans. Defaulting on your loans can wreck your credit — not a good move for young Americans who need to preserve their good credit for other major purchases like a car or a home. You can see how your student loans are impacting your credit scores for free on

3. Automate

While student loans may seem less important than rent, food and even clothes or gifts, missing or getting behind on payments can seriously complicate your life. If you have trouble making debt repayment a priority or often forget to write a check every month, it’s a good idea to set up automatic payments.

So long as you can ensure the money will be there every month, the loan servicer will automatically deduct your payment from your bank account. Everything can be managed online and this way you won’t have the choice to avoid your payment. Some lenders even offer incentives and discounts for enrolling in automatic debit.

4. Work With What You Can

There may be options available to you that you do not know about that can help you pay down these loans. Some employers offer assistance with student loans, as part of a benefits program. Others might be willing to offer some assistance if you ask. You can also volunteer your way to a debt-free life. Furthermore, do not forget to take advantage of tax deductions — you can deduct up to $2,500 of the student loan interest you pay in a single year if you fall within a certain income range. Also, consider putting any tax refund you get toward your loans.

It may seem unfair that you have to grapple with education debt in addition to the regular expenses of life, but there are certain actions that can make it a little easier. It can also help to keep a positive attitude and focusing on the good that came out of getting your education.

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AJ Smith is an award-winning journalist with more than a decade of experience in television, radio, newspapers, magazines and online content. She currently serves as the managing editor for SmartAsset. AJ has a passion for meeting new people, sharing stories and helping others. She has degrees from Princeton University and Mississippi State University. AJ and her husband also write and illustrate educational children’s books.