How to Manage College Debt

A group of students walk down an outdoor brick stairway as the sunlight shines over campus on a warm evening.

This year’s college graduates left school with an average of more than $37,000 in student loan debt. If you’re in a similar situation, launching your career and your life with significant debt can make it considerably more difficult to achieve other financial goals, such as purchasing a home or saving for retirement.

But even if you leave college owing tens of thousands of dollars in student loans, you don’t have to remain saddled with that debt forever. Fortunately, there are feasible strategies and student loan debt solutions for paying off that debt sooner rather than later, so you can move forward with the freedom to reach other financial and life goals.

Consider these four steps for how to deal with student loans by managing—and getting out of—student loan debt.

1. Take Advantage of Flexible Repayment Options

Just because you have a set a monthly payment amount right now doesn’t mean that has to remain the same over the course of your student loan. You can often adjust your rate via a flexible repayment option, which may be available through your loan provider or by working through the federal Student Aid website.

If the standard repayment plan, which requires borrowers to repay a set amount every month for up to 10 years (or longer for consolidation loans), doesn’t work for you, there are a number of other options. For instance:

  • Income-sensitive repayment plans determine your payment amount using your monthly income and allow you up to 15 years to repay the loan.
  • Income-based repayment plans allow qualified borrowers to make payments that equal 10 to 15 percent of their disposable income and offers loan forgiveness for loan amounts that are not repaid after 20 or 25 years.
  • Pay As You Earn (PAYE) repayment plans allow qualified borrowers to make payments that equal 10 percent of their discretionary income, and the payment amount is recalculated each year. After 20 years, any outstanding amount is forgiven.

2. Consider Refinancing Your Student Loans

For some, refinancing student loans can help save money on monthly payments or over the life cycle of the loan. Essentially, refinancing means you replace your existing student loan with a new private loan at a new interest rate, and maybe with different repayment terms.

To qualify for refinancing, you’ll usually need to be employed, have positive cash flow, and a good credit score. If you’ve built a positive employment history and strong credit score since graduating, you may be a good candidate for refinancing.

One option is CommonBond, which is a student loan that gives students and graduates simpler, more affordable, and transparent ways to pay for higher education.

If you would like to explore what refinancing options might be the best fit for you, use our Fifth Third Financial Calculators. These can help you answer questions like: “How Long Will it Take to Repay My Loan?” and “Should I consolidate my debts?

3. Develop a Realistic Budget and Stick to It

The best way to get out of student debt is to simply focus on paying off those loans as quickly as you can. That will probably mean cutting your spending in order to free up more money to apply toward your loan balance. While that will require willpower in the present, you’ll be grateful in the future when you’re debt-free.

Start by developing a budget that includes all your spending for each month and commit to it. A good rule of thumb is to apply 50 percent of your income to essentials, such as housing, utilities, food and any other bills you pay on a monthly basis. Next, apply at least 20 percent of your income to savings and debt payments, and no more than 30 percent of your income to discretionary spending. By trimming your essentials and your discretionary spending—cutting cable or Netflix account, for example—you can apply more and more to your debt payments over time.

4. Put Extra Money Toward Student Loans to Pay Them Down Quicker

When you receive a bonus at work, a tax refund or a cash gift for your birthday, resist the urge to buy a new recliner or take a weekend road trip. Instead, apply those extra funds directly to your student loans. Every little extra payment you make will add up to help you get out of debt faster so that in the future, you can enjoy those extra windfalls without any guilt.

Another way to expedite the payoff of your loans is to simply throw all your spare change toward the balance. With the Fifth Third Momentum App, the “extra change” from each debit card purchase is applied toward your student loans. That means if you purchase something that costs $18.64, the purchase is rounded up to the next dollar and the extra 36 cents would be applied to your debt. Even though each roundup will be a small amount, you may be surprised how quickly these small payments add up and put a dent in your college debt load.

Managing Student Loans with Fifth Third Bank

To learn even more about student loans, visit our Student Loans page or call

1-866-671-5353 to speak with a financial advisor.

Fifth Third Bank, National Association, may refer customers to CommonBond. Compensation for such referrals may be paid by CommonBond to Fifth Third Bank if the referral results in new business for CommonBond. The amount of any referral fee paid or received services will not affect the fees paid or payable by you. Loans are subject to credit review and approval.