This post is sponsored by Lexington Law.

One of my least favorite bills to pay, was my student loans. Not that I was in love with paying my water or cable bill, but it was just different.  Whereas I felt like I was reaping the benefits of my phone when I paid the bill, it was tough to swallow paying for something that I did a few years ago. It might sound silly, but for a long time it felt like the bills would never end and I got even more frustrated with how much I owed.  The day that I finally paid them all back was amazing.  I just stared at my congratulatory email and ecstatically jumped up and down.

But I’ll be honest, there were months where I didn’t want to pay it and was so close to using the money for something else.  I can easily see how I could have gone down a rabbit hole of pretending it didn’t exist while racking up tons of penalties and hurting my credit in the meantime.  Credit that would have impacted our ability to buy a home and car.  In hopes that you don’t get caught up in not paying your bills, I want to share some tips that can help you pay off your student loans before they start to impact your credit.

Keep track of what you borrowed

When I was getting ready to start paying back my loans, I thought it would be simple and just pay one bill each month.  It turns out, it really wasn’t.  I had two different types of loans (unsubsidized and subsidized) and from various lenders.  Filling out the FAFSA form was extremely confusing and I wasn’t as proactive as I could have been in speaking to my school’s resources.  In general:

Unsubsidized loans: interest is paid while you’re in school and you have a six-month deferral period after graduation to start paying them back

Subsidized loans: interest begins accruing at the start of the loan

There are some more nuances to these types of loans and what degrees qualify for them, but it’s important to know what you owe and who you owe it to (interest and principle).  It sounds obvious, but you might have taken out loans from different financial institutions and knowing who you owe, what you owe, and when it’s due is important.   Look back through all of your paperwork and contact any financial institutions that you borrowed money from with questions.  If you’re moving, you also want to update your email and physical address just to be sure that you’re getting the most up-to-date information.

Pro Tip: Create a spreadsheet of exactly what you owe, how you need to pay it, and when it’s due.  Set a calendar reminder the day before to alert you.

Start paying right away

Even though some of your loans may have a grace period, you can start paying them right away.  Or if you don’t want to start before you feel like you “have” to, make sure you have money put aside.   If you get too comfortable in your new lifestyle and think that you don’t have this bill, you’re more likely to find another place for the money which can lead to hurting your credit.

Pro Tip: Each month during your six-month grace period put aside the amount that you will need to pay.  Then use this money as additional payments throughout the year or double your first six months’ worth of loan repayment.

Be realistic

As much as you might want to pay off your loans in the next year, evaluate if that in fact is realistic.  If you owe more money than you’re bringing it, you’re going to need to find a way to either make some extra money or re-evaluate your plans.  This can be adding on a side hustle or extending your timeline.

At the very least, you want to be making minimum payments each month and don’t want to get into a situation where you can’t afford the payment.  Unfortunately, just because you pay more one month doesn’t mean you get to skip the following month.  Don’t push yourself to the limit as you might wind up hurting your credit if you’re not able to keep up with your unrealistic goals.

Pro Tip: Get a clear picture of your finances and create a budget.  Make sure you know how much money is coming in and how much needs to go out. This shouldn’t be done in your head but either through an app or a spreadsheet.  Something where you can track your finances in real time.

Register for auto pay

Auto pay can be a great thing!  I set some of our bills up this way as it leaves the “thinking” out of it.  I know that each month on this specific date, Netflix and Hulu will be paid without me having to click a button.  It saves on what you could be potential late fees.

With that said, you need to make sure the money is in your account in the first place.  If your pay is not consistent or the timing is off for when the bill is due, you’ll need to re-evaluate.  You can call the financial institutions and request a date change.

Pro Tip: If you’re nervous to set up your loans to auto pay, open up a bank account. Have your loan payment automatically go to this account every paycheck and manually pay it from there.

Research loan forgiveness options

Loan Forgiveness programs are a great way to remove some of your student debt while working at a job that interests you.  According to Lexington Law, there are four basic types of student loan forgiveness programs:

  • Teacher Loan Forgiveness—For people teaching full-time for five years in a low-income school district.
  • Public Service Loan Forgiveness—For non-profit or government employees who are repaying their Federal student loans based on income.
  • Closed School Discharge—For current students or recent students of a school that has closed. Most applicants were students at ITT or Corinthian College.
  • Total and Permanent Disability Discharge—For those with total and permanent disabilities.

Your student loans are not automatically forgiven and you usually need to make a minimum of 120 payments.  After that payment, you can have the remaining balance removed. To participate in one of these programs, you need to contact your loan provider immediately to see if you qualify and complete the necessary forms.  They can review if your current position qualifies and help you understand how this impacts your remaining payments.

Speak with human resources

More and more organizations are offering student loan repayment programs.  They know that this debt can be holding us back and that it’s an effective way to start retaining their employees.  While this is not offered at all company’s it’s worth exploring the option and plans your company may offer.  If you’re looking for a new job, this may be something you can negotiate or may help you decide between one company or another.

Pro Tip: Look through your organization’s benefits to see if you qualify for anything that you might be missing.  Maybe they don’t help you pay for student loans but reimburse for a gym membership. If you’re shelling out the money for the membership and can get that covered, you can use that money towards your loans.  Don’t leave free money on the table.

Consider consolidating or refinancing

Depending on the type of loans and your credit, this may be an option.  Lenders want to see that you have a good and steady income as well as a high credit score before they would even consider this for you.  If you’re able to refinance your loans, you may be able to negotiate the terms of your payment and get a lower interest rate.  This can make a huge difference in what you owe overall.

Pro Tip: Reach out to  Lexington Law to get the help you need to work toward repairing your credit.

Not paying back student loans can be detrimental to your credit score.  And creating a realistic plan with a budget is essential.  Take the time and do your research by speaking with human resources to ensure you’re not leaving money on the table that can be used to help you pay back student loans.  Do you know where your credit stands?  Lexington Law provides a free credit consultation and they work to help you make sure your credit history is fair and accurate.

Alissa Carpenter