It’s really easy to forget about your loans in graduate school because there are so many other things to think about. However, your loans will eventually catch up to you, and you’ll need to start making payments on them. Unfortunately, this tends to start happening right as you’re midway through a fellowship and trying to apply for jobs, or when you’re trying to apply for licensure and take the licensing exam. Having to start paying on your student loans can come at a very overwhelming time, and also be an overwhelming thing to think about. With some simple organizational strategies, you can feel more confident about the financial responsibility that awaits you.

Organize Your Priorities

Consider how you want to go about paying off your student loans. Some people want to keep their loans on the back burner, pay the lowest amount due every month, and use whatever expendable income they have to start living life. After all, this is finally the time for self-care and eating more than whatever is on sale at the grocery store.

There is also the mindset of wanting to get rid of loans as quickly as possible and being willing to make cuts to the quality of living until loans are paid off. These cuts might mean skipping Friday lunch dates with colleagues or still trying to share a hotel room with three other people when you go to conferences. Wherever you fall on that spectrum, or even somewhere in the middle, is up to you. You just need to know how you plan on organizing your money, once you finally start making some!

Organize Your Loans

You’re first going to want to look up all of your loans and list them. List how much you owe, how much the interest is, and to whom you owe payments. This step is crucial because you will likely have acquired multiple loans during the course of your graduate education. For example, some loan servicers will allow you to borrow $10,500 but will break that amount into several smaller loans, each with varying interest rates. Maybe $5,000 of that will have one interest rate, another $2,500 may have another interest rate, and the remaining $3,000 may again have a different interest rate. This step is also still important if you only took out one loan per semester, because even at the end of four years of graduate school, that’s eight loans to keep track of! Being able to keep track of your loans with this information in mind also helps when considering how you plan on organizing your payments.

Organize Your Payments

Now that you know what kind of payee you are and how many loans you have, it’s time to organize a payment strategy. For this, you have a number of options, which may be informed by the amount of money you’re willing to part with to pay your loans.

Servicer Suggested Payments

This method takes up the least amount of cognitive energy, and the least amount of money from month-to-month, but it might leave you paying a lot more interest in the long run. If you decide to pay off your loans by waiting for your servicer to bill you, and then paying only that amount, you have a set, predictable amount that you can work into your budget. This strategy can be really helpful if you’re also trying to save up for fellowships, moving expenses, licensure fees and the like, and have a budget with a lot of moving parts. However, by only making minimum payments, you leave it up to your loan servicers to decide how much of your payment goes towards principal and interest, so you will predominantly pay on interest, and therefore pay on your loans for a more extended period.

Avalanche and Snowball Methods

If you decide to organize your payments with either of these methods, you’ll want to refer back to that list of loans you made earlier. If you’re going to pay off your debt with the “avalanche” method, you pay towards those loans with the highest interest rate first, even if those loans are the largest ones. This strategy tends to make the most mathematical sense for people, but it can be hard to continue to make payments on a massive loan with a high interest rate and feel like you’re making progress.

On the flip side, the “snowball” method has you focus on the smallest loans first. This approach allows you to feel like you’re making more progress as you pay off the smallest loan first, then the next smallest, then the next. It’s positive reinforcement, and while it may mean you accrue more in interest in the long run, for some this is the easiest way to organize how they pay off their loans. What is important to mention is that in order to pay off your loans using one of these two methods, you may need to make more than the minimum payment. Depending on your servicer, you may not have a say on which loans your payments go towards every month. In this case, you might only be able to put money towards a specific loan once you pay off the minimum amount required by your servicer.

Consolidating and Refinancing

The third way to go about paying off your loans is to consolidate or refinance your repayment strategy. You can consolidate or refinance your federal loans, which could help take down some interest rates and help you take ten small loans and merge them into one or two big ones. Going on an income-based plan can largely, but not always, reduce the amount you pay every month. The trade-off is that you will have to recertify for the plan every year, and the amount you will have to pay will change based on the income you report. You’re also paying mostly towards interest with each payment you make, so over the course of ten years, for example, your balance is growing because you are not paying the full amount added from interest every month. For more about federal loans, click here.

As (former) graduate students, many of us take pride in being organized. We might have colored notebooks for different classes, binder tabs, or a thoughtful way of storing information on our computers. Yet for some reason, the idea of paying off student loans often sparks chaos. By simply organizing a few important pieces of data surrounding your loans, you can master your student debt and quell the anxiety that comes with this task.

Dana Leigh Formon, PhD
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