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Paying Off Student Loan Debt: 5 Tips

Weighed down by student loans? You’re not alone: Approximately 40 million Americans have student loans (in total, a staggering $1.2 trillion), and about 71 percent of bachelor’s degree recipients graduate with debt, according to the Institute for College Access & Success.(1)

So, how to lighten the load as quickly — and as painlessly — as possible so that you can begin living your post-graduate life the way you envisioned? Here are some suggestions…

Pick the right student loan repayment plan

Despite the dizzying array of student loan repayment options — from income-based repayment plans to income-contingent repayment plans to pay-as-you-earn repayment plans, and countless others — there’s very little thought that goes into the decision-making process.

“Most people just go with the option that has the smallest monthly payment, and that’s the costliest in terms of interest paid over the loan’s lifespan,” said Lauren Asher, president of the Institute for College Access & Success, a nonprofit organization that works to make college more affordable. While “everyone has their own priorities and resources in terms of how they spend and save money, the best option is the standard 10-year repayment plan.”

This plan breaks down your student loan balance into fixed monthly payments of at least $50 for up to 10 years. Compared to other plans, it is going to cost you the most per month (so make sure it’s budgeted for), but you’ll pay off your student loan faster, and save more in interest, too.

Make one extra student loan payment/year

Make an extra payment a year – 13 instead of 12. It’ll shave time off the repayment term, and save you interest.

Enroll in auto-debit

Enroll in auto-debit, where your student loan servicer automatically deducts your payment from your bank account each month. You’ll be rewarded with an interest rate reduction, typically a quarter of a percentage point, or 0.25 percent. Is this a big deal? It can be, particularly if the lender doesn’t use the interest rate reduction to reduce the monthly payment and instead allows more of the monthly payment to be applied to the principal balance of the loan.

Deduct your student loan interest

What’s the one silver lining of having student loan debt? The interest is tax deductible — even if you don’t itemize your deductions. Yes, there is an income limit to this deduction, but if you make less than $60,000 a year or $120,000 if you’re married and filing jointly, you can claim the full deduction of $2,500.

“You can claim this deduction as long as the loan is in your name (or your spouse's if filing jointly) even if somebody else paid the interest — regardless of who that is.”

Get help from your employer

As employers look to attract and retain top talent, more and more companies are either exploring or offering one of the hottest things in benefits right now: student loan repayment assistance programs.

So what if your employer doesn’t currently offer such a plan. It never hurts to ask for it, especially if the company really wants you.

1 Institute for College Access and Success, Quick Facts About Student Debt, March 2014

Provided by Jordan Jones, courtesy of Massachusetts Mutual Life Insurance Company (MassMutual) For more information, please see




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