Best Practices When Paying Off Multiple Student Loans


Debt is like the “quicksand” of real life. Maybe all those years ago, learning about the ever-present danger of quicksand was actually a metaphor for falling into debt! No doubt, climbing out of the red is difficult. Sometimes it seems impossible when you work for a paycheck week to week. 

But it’s important to remember that student loans are not necessarily bad debt. There are options open to you and good practices that can help you change your debt-to-income ratio. In this article, we’re going to discuss a few strategies that can help you get back on top of things. 

1. Look Into “Forbearance” With Your Lender

When COVID-19 happened, the U.S. spent over $2 trillion to help with relief efforts. So while many people think looking to the federal or state government is a waste of time, there are millions of people who did the work and found some financial aid. 

 Student loans very oftentimes come with special forbearance options. If you’re experiencing unusual hardship, you can suspend payments temporarily until you get a better footing. The same holds true for some utility bills. 

2. Strategically Pay Off Your Loans

Two basic strategies for faster loan repayment are: 

  • Pay off all your expensive loans as quickly as possible
  • Or pay off your smallest balances first

This focused approach gets rid of interest charges faster. It may also require you to make more than the minimum monthly payment, so you can finish off a balance before more interest accumulates. But it works, and once you get rid of some of those balances you are in a better position to save money or even qualify for refinancing. 

You can also read our article on corporate finance theory, which might also help explain some of the fundamentals of creating cash flow and projecting future expenses. 

3. Refinancing and Consolidating Students Loans

That’s right – refinancing and or consolidating your student loans (and other debts) may be one of the best ways to change your debt-to-income ratio. If you can find a lender that refinances your student loans at a lower interest rate, that’s going to directly decrease your expenses every month. 

It’s possible to get a better interest rate by refinancing, but putting multiple loans under one new refinanced loan and calculating the payoff amount on student loans sooner rather than later can result in a less volatile interest rate. Even if interest rates remain about the same, you might still be able to get a shorter repayment term (which cuts some of the interest), or longer repayment terms (which frees up more cash). 

Just review your current loans and the new offer to see if the math adds up. You can take a look at SoFi’s refinance loans for students as an example of what consolidation might look like. 

4. Find a Job with a Student Loan Assistance Program 

Did you know that some employers help their best workers by reducing their student loan balance? Whether it’s complete student loan forgiveness or just partial repayment assistance, these benefits go a long way in helping to pay off debt.

True, some of these job fields are essential workers, like public servants, doctors and nurses, and attorneys. But some employers will even help workers who volunteer or work in nonprofit organizations, as well as automotive workers or other essential jobs. 

Check out this article on employer-sponsored student loan repayment becoming a next-generation trend. 

Stay the Course 

It’s important to remember that getting rid of debt is a multi-year process. That means the only logical way to persevere and do it, is to build your lifestyle and business around your proposed budget. 

Once you start progressively making more money and cutting down on unnecessary expenses, you will start to get that “down the hill” feeling of actually eliminating balances. 
You can do this by climbing the corporate ladder or by creating more avenues of income on your own. Read our article on staying motivated in your career for some help in staying focused on the big picture.

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