Student Loan Debt Strategies

Buchalter & Pelphrey

Due dates for student loan payments are fast approaching, and many people don't know how to handle the cost. Below are some strategies for former and soon-to-be students looking for a better financial future.

Future Students

Whether you're a recent high school graduate or looking to pursue a master's degree, it's important to consider your options. Despite the pressure to attend a university, college isn't for everyone. It's an extremely expensive academic immersion into different fields, but not all jobs require a degree or utilize academic knowledge.

If you are unsure about whether you should go to college, speak with your guidance counselor. They will be able to tell you about community college classes, trade schools, apprenticeships, certification programs, or additional financial support if you choose to go to college.

Community college is a fantastic option at a lower price, while trade schools and certification programs focus on the exact skills you need to do a specific job. By choosing an alternative route, you aren't "less smart" than your peers, but are simply pursuing a different path.

College costs tens of thousands of dollars, and even those who have one or more jobs during their time in school may not be able to graduate without debt. Think carefully about your goals, and explore all the options available to you. You might be able to save money and chase your dreams without a degree.

Former Students

If you've already graduated or have been graduated for years, you're familiar with the burden of student loans. Unless you are a 2020 grad with the benefit of a loan moratorium, monthly payments, and high interest are a fact of life.

Loan payments can be several hundred dollars at high interest rates. Some loans have capitalizing interest that compounds year over year until the interest amount rivals the principal. However, there are ways to manage your money and research your options to get into a better position.

Federal Loans

The beauty of federal loans is that they can be consolidated. For example, if you have a loan of $15,000 and another for $50,000, you can consolidate them into a single loan of $65,000. Consolidated loans often have fixed interest rates which means the interest amount does not increase exponentially – it stays the same throughout the life of the loan.

In some rare cases, consolidating federal loans can make you a candidate for loan forgiveness, but these situations aren't the norm, so it's best to choose a plan that's doable over the long term.

Private Loans

Private loans from banks or other lenders can be refinanced. When this happens, the lender pays the loan amount in full then creates a new loan at a lower interest rate.

This can knock your loan amount down by several thousand dollars which makes a big difference if you have a high amount to pay. Every penny counts with student loans, so an option that allows you to save money is a step in the right direction.

It's important to note that due to the pandemic, interest rates are low, making refinancing an even better option for student loan debt. Always consult a financial expert before attempting to refinance on your own.


A primary concern for most people is their credit score. Hard credit checks and loans can increase or decrease your score depending on the situation.

Refinancing and reorganization won't affect your credit score in a significant way, and any points lost in the process can be made up later. The only time your credit score could be in jeopardy is if you fail to pay back your loan.

DO NOT avoid paying your student loans. This is called default and if you default on a loan you could be at risk for collection, fees, ineligibility for forbearance, and loss of tax refunds and social security payments. You have options for financing and assistance programs that won't make your financial situation worse.

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