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The majority of students heading to college use student loans as a quick way to enter school. In fact, 70 percent of college students graduate with debt averaging more than $37,000. But with multiple options for paying off student loans and a little extra planning, you can formulate a plan to pay them off in a way that fits your long-term financial and career goals.

Before College, Assess Your Situation

While the thought of paying off loans for twenty or more years may sound daunting, it's important to consider your long-term goals. Employees with a bachelor's degree earn about $32,000 more annually than those with a high school diploma — with the average starting salary exceeding $50,000 for the class of 2018. However, compensation can vary based on profession and geographic region so be sure to search salaries in your field as a benchmark.

When looking at schools, consider which universities may offer interest-free institutional loans. These loans come from the college or university's own funds. Eligibility requirements and repayment terms vary, but you may find more forgiving rates than federal, state, or private loans. Look at grants and scholarships as another source of funding.

Estimate Your Payments During College

Once you have a sense of how much debt you expect to accrue and your projected salary expectations, you can estimate your payments. This will vary based on the loan amount, type, interest rate, and income.

If you have other debts, from credit cards or otherwise, consider paying them off while you're in school. As long as you're enrolled full-time, most student loans don't require you to make payments until six months after graduation. Calculate how much you need to pay each month to settle your debts before graduation.

Balance Payments After Graduating

In addition to loans from multiple financial institutions, you probably have other monthly expenses such as rent, a phone bill, or insurance. It can feel overwhelming if all of these payments are due at once. Ask your lender if you can switch the date your payment is due. For example, if you get paid biweekly, you may find it easier to have one of your loan payments due at the middle of the month.

Paying your bills on time and meeting minimum payments on your loans is the baseline. Put any extra money you can toward the principal on your loans to reduce the cost of interest. If you still have credit card debt, consider putting any extra funds toward them first, as credit cards often have higher interest rates than student loans. If loans are your only debt, put extra dollars toward your highest-interest loans. Use a debt elimination calculator to plot your best course.

Get Lower Interest Rates

One way to pay off your student loans faster, and at a cheaper cost, is by having less interest to pay. Loan consolidation combines all of your loans into a single loan. This gives you one monthly payment, but you'll want to weigh the pros and cons. For example, you may forfeit benefits, such as losing credit for payments you've made toward income-driven repayment plan forgiveness. On the flip side, you can move any variable interest rate loans (those with interest rates that rise or fall with market interest rates) to a fixed interest rate loan. You'll also want to note whether the payoff period is too aggressive, or so long that you'll pay even more interest.

Find the strategies for paying off debt that work best for you and then reevaluate throughout the year. Receive a work bonus? Put it toward your loans. Lost your job? See if you can adjust your payments based on your income. It's likely that the best strategy for your situation will change, and keeping your payment plan on autopilot may cause you to pay more in the long term.


This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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