4 Helpful Tips To Pay Off Student Loans

About two-thirds of college grads come out of school with student loan debt, and their average debt load is more than $23,000. Since the average student loan balance has increased 75% in just the last five years, it's no wonder many people are struggling to pay down student loans these days.

"Student loan debt is a huge challenge for so many people these days," says credit and debt expert Wayne Sanford, owner of New Start Financial Corporation. "You need to know your options and how you're going to pay the debt off, because you mostly cannot get away from paying your student loans even if you declare bankruptcy."

The first step toward paying your student loans is to make a budget to help you set aside the money you'll need. "Once you know what your monthly payment is going to be, work your life around that, and not vice versa," says bankruptcy attorney Daniel Gershburg, president and owner of Daniel Gershburg, Esq PC. If you need to, "find a cheaper place, car, etc., to make it work."

If that's not enough, consider these four options:

1. Lengthen your repayment period

Many people are on a standard repayment plan, where they must repay their loan within 10 years. With that plan, you'll pay less overall (because the interest is compounding for a shorter time) than with a longer repayment period, explains Gregory Alerte, a Certified Financial Planner and managing director of Gregory & Company Comprehensive Wealth Management. But for some people, the monthly bills that come with a 10-year-repayment schedule are too high. If you're in that boat, consider an extended repayment plan, which allows you to repay your loans over a period of up to 25 years. "Although extending the repayment plan will, in the long run, cost you more money, it is a decision that has to be made if the standard repayment plan is too much for your budget," says Sanford. To qualify, you must have more than $30,000 in debt.

2. Change your repayment method

If you can't qualify for an extended repayment plan or want another option, you have a few choices. Consider a graduated repayment option, in which you repay your loans in 10 years, but the payments start out low and then increase every two years or so (so you might start out paying $210 per month, but towards the end of the loan period pay more than $500 per month). This option works well for someone who is currently in a low-paying job but will get paid more in the near future, experts say. However, you risk being unable to make the higher payments down the road.

A number of other repayment options take income into consideration. These include the income-based repayment plan (term is up to 25 years and monthly payments are based on income, family size and state); the pay as you earn repayment plan (term is up to 20 years, and payments are based on income, family size and state); the income-contingent repayment plan (term is up to 25 years and payments are based on income, family size and total amount of loans); and the income-sensitive repayment model (term is up to 10 years and payments are based on income). The U.S. Department of Education offers more details on each of these options.

3. Get a deferment or forbearance

If you simply can't afford to pay off your student loans, ask your lender for a deferment or forbearance, says Gershburg, which allow you to delay paying your loans. "Some people don't know this and instead start missing payments, which can negatively affect their credit, which landlords, jobs, etc., can look at," he says.

You can get a deferment for economic hardship, unemployment, military deployment, enrollment in school, certain internships and national service. A forbearance allows you to postpone paying your student loans for up to a year. You can qualify if you have certain kinds of medical or dental internships, membership in the National Guard, and sometimes for financial hardship or illness.

4. Get your loans forgiven

If you can get your loans forgiven, you probably want to do it, says Alerte, as it means you never have to repay them. You can get your federal loans forgiven for certain kinds of volunteer work (Americorps, Peace Corps, VISTA), military service, or if you teach or practice medicine in certain communities. To learn more about these options, contact your loan provider. Note that private student loan providers may not offer many of these options.