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How to manage your student loan debt

When you’re thinking about student loan debt, it’s important to remember that borrowing for graduate school with federal and/or private student loans is an investment in your career and your future. According to a national survey, the median annual wage for young adult workers with a high school degree was $30,500, while workers with a bachelor’s degree earned 64% more ($50,000). Workers with a master’s degree or higher earned 20% more than those with an undergraduate degree ($60,000).

Beyond student loans, you may find yourself with other types of debt:

  • Mortgage
  • Credit cards
  • Car loans
  • Personal loans
  • Home equity loans

Balancing that debt with your living expenses may not always be easy.

Tips for deciding which debt to pay off first

Imagine you get a lump sum of $5,000. What should you do with it? Splurge, save, or pay off debt?

How you decide to use the money will depend on where you are in your financial journey. Here are a few tips to consider:

  1. Make sure you have an emergency fund. If you don’t have one, consider starting one before you pay off any debts. You don’t want to be caught short with an emergency medical or car repair bill that force you to turn to a high interest-rate credit card that you’ll have to pay off. Keep your emergency fund liquid in a savings, high-yield, goal-based, or money market account so you can have easy access to the cash but still earn some interest.
  2. Pay off your highest-rate debt first. Once you have your emergency fund in place, pay off debts like credit cards or personal loans next.
  3. Remember to have fun! Set aside some money to get away for a weekend or buy something new for your home.

This simple calculator can help you figure out which is the best financial step—pay off debt or save.

Tips to manage your debt

How you manage debt is ultimately a personal decision, with no one-size-fits-all. These tips can help you figure out what’s best for you.

  • Consider your next life goal. Do you want to buy a house or a car? Do you need to improve your credit rating by lowering your credit card debt?
  • Check your FICO® Score. See if you can manage your debt to get a higher score.
  • Determine your payment style. Are you a person who’d feel better paying off one card, loan, or debt in full, even if it’s a small amount, so you have one less thing to think about? Or would you prefer to consolidate several debts so you’re making a single payment every month? Learn about consolidating and refinancing student loans.
  • Maximize your tax benefits. Interest on student loans and mortgages can be tax-deductible.
  • Create an emergency savings fund. If you don’t have one yet, consider having some money available for a crisis. It can keep you from incurring a high-interest debt if you have an unexpected car repair, health issue, or other immediate need.
  • Use credit cards wisely. By making regular, on-time, monthly payments, you’ll avoid late fees and it may help you build your credit history. Consider a credit card with rewards that can help you with paying down your existing student loan debt.

How to organize your student loans and other debt

It can be overwhelming to have loans with different due dates, amounts, and requirements. To make the process easier, start with a list of your outstanding student loans and other debt. This can be as simple as a drawing a table in a notebook, creating a spreadsheet, or using a sophisticated budgeting tool.

In your spreadsheet, create fields for the following:

  • The name of the debt (student loan #1, credit cards #1-4)
  • Interest rate and type (fixed or variable)
  • When payments are due
  • Account number
  • Minimum payment
  • Your balance
  • Any possible tax benefits

Download a monthly budget worksheet (PDF)

To make sure you’ve captured all your outstanding debts, consider getting a free copy of your credit report. The Fair Credit Reporting Act (FCRA) requires each nationwide consumer reporting agency to give you a free copy of your credit report every 12 months. Request your copy from or call 877-322-8228.

Learn what’s in a credit report

When you total your monthly payments, you can continue your spreadsheet to include your income and monthly living expenses, like rent or a mortgage. Armed with a budget, you can start to identify areas where you can cut back to manage your debt more effectively.

Consider a financial professional

Some graduate schools and companies offer financial services as part of their benefits. If yours does, this is a great opportunity to get professional advice on managing credit and getting on track to reach your financial goals.

 This information was gathered on July 17, 2017 from

 This information was gathered on July 17, 2017 from

 This information was gathered on July 17, 2017 from

Sallie Mae does not provide, and these materials are not meant to convey, financial, tax, or legal advice. Consult your own attorney or tax advisor about your specific circumstances.