Paying Off Student Debt for Your Online Education

Whether you choose to attend a physical brick and mortar campus or enroll online for courses, one aspect of obtaining a higher education remains the same: Student Loan Debt.

Higher education can be expensive, and distance education courses are sometimes more expensive than their traditional counterparts which can necessitate taking on a fair amount of student debt. While many wonderful courses are available at these institutions, there is rarely mention of what exactly a student should do once they find themselves straddled with a large amount of student debt and a complete lack of instructions on how to manage and repay them.

Managing debt, especially student debt is an important life skill and one which can dramatically affect the choices you make in regards to online education and how your financial future will look.

The first step is to take out an old fashioned pen and paper, or launch Excel to gather all your debt info into one place. For each loan write down the total amount owed, the interest, minimum monthly payment, dates at which repayment begins and/or increases, the monthly due date, the time required to pay off the loan paying the minimum, and the information on how to login to each loan.

Calculating things like loan payoff is surprisingly something that most student loan lenders do not provide online. The website unbury.me offers a simple and excellent tool for generating that information quickly, as well as allowing you to view hypothetical payoff dates for each of your loans paying more than the minimum.

In the case of managing debt, knowing what debt you have can be half the battle. Avoiding late fees and properly budgeting is a natural result of becoming aware of the total amount of student debt accrued.

While logging in to your various loans you may notice some offers worth paying attention to. Many lenders like MyFedLoan and SallieMae offer reductions of up to half a percentage point for using an autodraft from a checking account to pay them. This can be a significant savings, especially early on in the life of a loan and can be a 2 minute way of saving you at least a $100 a year. Use that savings to pay more towards your loan and your savings will be even higher. Be sure that you're also taking the maximum tax deduction.

Now use a calculator or your preferred spreadsheet program to come up with a total of the amount you currently owe, the total you will pay at minimum payment levels, the date you’ll finally pay off the student loans, and what your monthly minimum payments look like. This makes it very easy to estimate the difference and savings that result from paying an amount above the minimum consistently.

Working out the exact amount within your budget that you can afford to pay towards the debt can have significant effects. Paying double each month can easily cut down your loan term by a decade or more as well as reduce the total amount of interest paid by more than half.

When budgeting it generally makes sense to pay off high interest debts first. For discipline reasons, some prefer to pay off smaller debts first which produces a visible accomplishment and can be more encouraging than simple working towards a large debt that takes longer to pay off. If you have credit card debt, pay that off first. Depending on your mortgage rate, care loan, and other debt’s interest rates it can sometimes make more sense to pay extra towards other debts as student loans can be tax deductible.

Once you budget an amount to pay each month, be consistent with it. Considering that amount to be your real minimum payment will make it easier to pay off your loan and is much cheaper in the long run due to interest savings. Reducing your student loans is a great feeling and completely manageable if properly managed.