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Back to School: How to Minimize Your Student Loan Debt

   Posted On: August 27, 2018  |    Posted In: Debt  |     Posted by: Broke Millennial®

The summer is winding down and it’s time to head back to the hallowed halls of college. You’re anxious to get back to your friends and return to the bubble you now think of as your second home. You’re not so excited about the price tag and the new round of student loans you had to take out. Instead of putting them off for your post-graduation self, try using some of these tips to minimize your student loan debt now!


It can be incredibly tempting to take out as much as you can in student loans, especially if you’re already a couple years in. You justify it by saying, “meh – what’s a little bit more?” The thing is, a little bit more can add up to be a lot. Especially once compound interest does its dirty work. Instead, it’s important for you to really run the numbers and take out the bare minimum you need. Ideally, student loans should only be used for your classes, books, and perhaps room and board while you can supplement lifestyle costs by working either during the summer months or during the school year.

Obviously, that isn’t an option for everyone – but it’s the minimizing your student loan debt, even if it’s just by a few hundred or a $1,000 each year is a huge help in the long run.

As a former resident assistant myself, I should make a plug here for becoming an RA in order to have your school subsidize the cost of room and board! My school even had the option to take monthly payments you could put towards whatever you like if you didn’t want it to cover room and board.

You can also use online calculators to get a sense of different payment plans for private loans and federal student loans.


There’s always a big push for high school seniors to apply for scholarships in order to minimize the cost of college, but then that conversation just seems to die out. Don’t let it! You can keep applying for scholarship opportunities all the way through college. In fact, there are some scholarships for which you won’t even be eligible until later in your collegiate career. Be sure to check all the options available at your school as well as options in your community and online. Scholarships, usually, don’t have to be repaid so any additional funding you get from scholarships can reduce the money you have to take out in loans.


The single best way to start chipping away at existing student loans is to start making payments early! The longer you wait to make payments, the longer interest keeps accruing. Making payments early means you reduce the amount of interest that can accumulate, which means saving yourself a lot of money. Just because you make one (or several or many) payments early doesn’t mean you have to keep making monthly payments if you’re still in school and your loan term is to start making payments after graduation.

Just throwing even a small amount steadily towards your loans each month is a great way to start getting used to making payments and chip away at that devilish interest!


If you need to take out a private student loan to fund your education, then you should see if the bank you plan to use offers any sort of discounts.

Being able to take 0.50% off your interest rate might sound small to you, but that can end up saving you hundreds, if not thousands, of dollars over the life of your loan.


Before you commit to all your federal student loans, you should run the numbers and see if you actually need every penny for this school year. Did you work a job over the summer that can cover your books and supplies? No matter how big or small, every penny you can return is going to be a huge help in the long run. Future you will figure out the whole time-space continuum thing to come back and give you a big ol’ hug.

You might be thinking? Wait – I can give money back?!

Yes, you can. It’s within your rights as a borrower to cancel all or a portion of your federal student loans as long as you do it within 30 to 120 days of when your school gave you the funds.  If you give any or all of your loan back within that 120 days, then no interest or fees will be charged.

You may also have received a student loan refund. The name makes it sound like “free money” a la a tax refund (which also isn’t free money, but that’s another topic). Unfortunately, it’s not. It’s still a loan and it’s still accruing interest. If you don’t need the money because your baseline needs have all been met and you’ll probably use it to subsidize late night pizza or underwrite spring break – then just give it back asap.

It’s not always as simple to return private student loans if you ended up applying for more than you needed.

You need to check the terms and conditions of your loan. You could always apply an excess funds as a lump sum payment, which sounds strange, but it’s basically paying part of the loan back with the loan.

Already graduated and in repayment mode? Go check out 3 tips for paying off student loan debt faster.

Photo from Pexels

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