The Surprising Truth About Managing Multiple Student Loans

Students taking on a massive amount of debt to cover college costs has become the norm, with many juggling multiple education loans just to reach graduation. However, nearly two out of three borrowers have difficulty repaying these loans. Staying on top of your loan terms, creating a detailed budget, and picking a repayment strategy can help you better manage your student debt.

Get in Tune With Your Loan Terms

To stay ahead of debt, borrowers with multiple student loans need to know the exact details of each of their loans. This includes:

• Name of lender: Student loans can be transferred between servicers. Keep track of these moves so you know who to contact if you ever have questions about your debt. 
• Loan amount: Knowing your outstanding balance is essential for effective repayment planning.
• Repayment dates: Being aware of when your payments are due and for how long you’ll have to make them will make it easier to stay on top of your debt and ensure your accounts remain in good standing.
• Interest rate: This determines how much you’ll owe the lender in interest each month. The lower the rate, the less you’ll pay in the long run.

Revise Your Budget

After analyzing the terms of your loans, your next step should be weaving those requirements into your budget. If debt repayment is a priority, then ceasing wasteful spending is also a goal you ought to have.

Start by analyzing your budget to get the most accurate picture of where your money is actually being spent. Next, take steps to improve that allocation. Create a detailed list of your income and expenses, including your student loan payments, and try to balance the two.

If you’re having trouble, consider distinguishing your needs from your wants and cutting back on discretionary expenses. Alternatively, you can try to get a side hustle or other source of additional income. 

Choose a Debt Payment Strategy

Once your budget is balanced, you’ll be ready to start making debt payments, but you’ll need to determine how best to do so. The debt snowball and debt avalanche methods are two commonly used repayment strategies for borrowers tackling multiple debts.

The debt snowball method entails tackling the smallest amount owed first and, once that debt is paid off, rolling that larger payment over to the next highest outstanding balance. The idea behind this strategy is that the relief from eliminating individual loans will motivate you to keep paring down your debt. However, because it doesn’t take interest rates into account, it typically isn’t the most cost-efficient option.

On the other hand, the debt avalanche method is likely better suited for someone with multiple loans. This strategy prioritizes putting larger payments toward the debt with the highest interest rate, then (once you’ve repaid the first loan) moving on to the next highest. While this may mean individual loans won’t be paid off as quickly, it’ll reduce the amount of interest you’ll pay in the long run.

Other Tips for Repaying Multiple Student Loans

When juggling multiple debts, setting up automatic payments is a great way to ensure you won’t miss any payments. Certain lenders, including the federal government, offer discounted interest rates or other benefits for using autopay.

Federal student loan borrowers also have certain benefits and protections that can make their monthly payments easier to manage. These include income-driven repayment (IDR) plans, forbearance and deferment options, and loan forgiveness opportunities.

You can also simplify having multiple student loans by rolling them into a single monthly payment. If you have federal student loans, you can combine them under a direct consolidation loan, while you can refinance private loans with a new lender. With either of these options, you may be able to secure a lower interest rate and/or a new repayment term that better suits your budget.

The Bottom Line

Having to repay multiple student loans can feel daunting, but it’s still doable. Through a combination of smart budgeting and a suitable repayment strategy, you can efficiently chip away at your debt over time.