How to Manage Your Student Loans

A group of college graduates are dressed in professional attire standing in a brightly lit office space on a sunny afternoon.

Congratulations! You’ve graduated college, landed your first job, and officially entered adulthood—with all its perks and responsibilities.

If you’re like most recent college grads, this includes grappling with student loan debt. And while those upcoming payments might seem daunting now, don’t despair: Tackle this challenge with a smart, practical strategy tailored to your personal circumstances and you’ll not only increase your chances of getting out of debt quicker, but also develop strong financial habits that can serve you well for years to come.

Here’s how to get started.

Get Organized

If your student loan offers a six-month grace period—as many do—use that time to research your repayment options.

If you choose the Standard Loan Repayment Program, for instance, you will have a set monthly payment amount for 10 years. Be sure you have room in your budget for that amount—or more—every month. If you can’t afford the fixed payment, consider signing up for an income-driven plan, which sets a monthly payment based on your income level.

This online estimator from the Federal Student Aid office can help you determine which path is right for you.

Remember a grace period doesn’t require you to wait the full six months before making payments. In fact, the sooner you begin repaying your loans, the sooner you’ll free those resources up for other financial goals. Start as soon as you’re ready.

If you have several loans, you may want to look into consolidating your balances, so you only have to keep track of one payment instead of many.

Choose the Right Plan

While it may be tempting to choose a repayment plan with lower monthly payments, doing so may substantially increase the overall amount you pay in the long run.

Typically, student loan interest accrues daily—take your current principal balance, multiply it by your interest rate, and then divide by 365 days and you’ll find out how much interest your loan is accruing each and every day. Larger payments can shave down the overall principal balance—and, thus, number of days on the loan—helping you avoid paying more interest than necessary on two fronts.

Build a Budget

As a recent grad you likely have fewer financial responsibilities than you will in years to come. Which means it’s the perfect time to commit to a budget that prioritizes student loan debt over some of that non-essential spending.

Not only should you put loan payments at the top of your budget, but if you are responsible for more than one student loan, you should also carefully prioritize which one to pay off first. Generally, it’s best to pay as much as you can on the loan with the highest interest and make minimum payments on the others. When the first one is paid off, move your higher payment to the loan with the next highest interest and so forth.

If you have extra money left over in your monthly budget, consider paying more than the minimum payment. Student loans typically do not have penalties for early repayment, and paying early can save you significant interest over time.

Make It Automatic

Consider setting up automated student loan payments directly from your paycheck or your checking account. That way you won’t be tempted to spend the money budgeted for whittling down your loan on something else.

New tech tools are available to help simplify student loan repayment. The new Fifth Third Momentum app, for example, can help you pay off your student loans faster by automating frequent micropayments toward your balance. You can connect the app to your Fifth Third debit card, link your student loan to the app, and choose to round your debit card purchases up to the next dollar or add one dollar to every purchase: If you buy lunch for $9.45, the app rounds up to $10. The extra change will be applied to your loan balance each week when you have at least $5 in round ups. The extra change or dollar will be applied to your loan balance, quietly chipping away at it over time.

Get Help

If you’re really focused on getting out of debt and moving on with your life, consider asking your parents, grandparents or other family members to join the effort. Ask them to contribute to your student loan debt in lieu of birthday or holiday gifts. Or consider refinancing with a program like CommonBond—a student loan lender that helps give students and graduates simpler, more affordable and more transparent ways to pay for higher education..

Set a Goal

Challenge yourself. Figure out the date when, doing what you’ve been doing, you will have your student loans paid off—and then set a goal to free yourself of the debt sooner than that. Make one extra payment each year. Use roundup payment technology. Bring a bag lunch to work every day for a month and add those savings to your next payment.

Today’s discipline and patience will pay dividends tomorrow. A focus early in your career on repaying your student loan debt will provide you the satisfaction of watching your balance drop in the here and now while in the long-term earning you a future free from student debt and able to focus on other financial priorities.

Fifth Third Bank 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.