How to Pay off Student Loans without Going Broke

This post was inspired by a reader question:

“How can I pay off my student loans without going broke?”

Student loans these days are a part of most college students’ vocabulary. Yes, there are some recent college graduates who didn’t have to take out student loans when they chose a college, but that’s pretty rare these days.

Before you sign that paper

Here are some tips for those of you who haven’t gotten to college yet. You will be able to avoid the debt headache if you follow this one tip.

Work during college

You can work full time while you are in school.

Cons: Your grades may suffer a little.

You won’t get to participate in the ‘College Lifestyle’.

Pros: You will have the money to take that extravagant vacation.

You can start building an early retirement fund or save money to start a business.

You’ve Already Signed the Paper

Here are some ways to make that looming debt a little smaller if you have already taken out some loans.

Only Borrow What You Need

If you know your major and you decide to take out a loan, only borrow what you can expect to make in your first year. For example, the starting salary for a finance graduate is 47,500 according to If you’re a Finance major, your total student loans for all four years of college should be less than or equal to this.

Don’t have a major?


If you are not sure what you want to do when you graduate, chances are you will be in school a long time, changing majors and racking up a big bill. If you are not sure what you want to do, start working full-time. You’ll at least find out what you don’t want to do, and it will put you closer to deciding what you do want to do.

Cons: You may have to get a part-time job to fill in cash for extra activities

Pros: You will have a low payment once you graduate

Borrow for a Full-Time Load

If you decide to borrow as much as the government allows and maybe more, you should prepare as much as you can while in school by networking in your chosen field and applying for internships as early as sophomore year.

Cons: You will have a large debt payment once you graduate

Pros: You will get the advantage of the full ‘College Lifestyle’.

You can work an unpaid internship to get the experience you need to pay your debts off once you graduate.

You’ve Already Graduated

So what if you’ve already graduated and now you have a humongous debt payment? You have a few options. First use a student loan calculator┬áto figure out what you owe.


If you are not making enough income to cover your loan payments, contact your lender and request a forbearance. As long as they are government loans, there are a number of options available for you.

Payment Plans

There are several loan payment plans available for those of us with Federal student loans. You can select a variety of repayment plans. One depends on your income, one is a fixed payment and there is even one that has a gradually growing payment. If you borrowed from a private lender, check with them to see what plans they have. Private lenders make their own rules with regards to repayment.


Hide! You can become a full-time student, again, and your lender should automatically get the notification from your school that you are a full-time student. This will increase your overall debt load, but you may gain some skills that will propel you into that full time job you need.

The Good News

There is a silver lining! Remember that the government loans that you have are locked in to a relatively low interest rate. If you pay them at 4% and you can make 7% with a dividend paying stock, then you are earning 3%. So don’t let your student loan payments get you down. You used a form of debt that’s called good debt. It’s debt that leveraged you into a position to increase your earning power. Eventually you will pay it off. If you can’t afford the payments right now, talk to your lender and explain your situation. They will do what they can to help.

Did you pay off your student loans already? Were you one of the few that didn’t have to take out loans?

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