Managing student loan debt

With student loans, you commonly aren’t expected to begin paying back the money you borrowed until after you graduate. This makes sense because the idea is that you’ll hopefully have a full-time job with a steady income after you finish school. In reality, it’s never too early to begin managing your student loan debt.

Rather than borrowing aimlessly and worrying about it after you graduate, having a game plan for managing (and even beginning to repay) debt while you’re in school can work to your advantage. Not sure where to start? We’ve got some practical tips for understanding the loans you’re taking out and how to budget for them accordingly.

Start By Understanding Your Loans

Whether you’ve already accepted loan offers for your first year of college or are still exploring your student loan options, knowledge is key. After all, you can’t expect to get a handle on your student loan debt in school if you don’t know the ins and outs of your loans.

Your Loan Type(s)

Start by considering the type(s) of loans you’ve taken out or plan on taking out to pay your way through school. There are two main types of loans: federal and private. Federal student loans can be subsidized or unsubsidized. With a subsidized loan, you won’t be charged any interest on your loan until after you finish school. However, with unsubsidized loans, interest will begin to accrue as soon as your loan is disbursed.


Unlike federal loans (which are backed by the U.S. government), private loans are issued by third-party lenders like banks and credit unions. These loans are available with both fixed or variable interest rates. They can be an excellent choice for borrowers who cannot cover all their education costs with Federal aid and scholarships alone.

Your Interest Rate

The interest rate on your loan(s) is essential to understand. If you have a subsidized federal loan, you won’t have to worry about accruing any interest until after you finish school—which can be a huge burden off your shoulders. With unsubsidized loans, however, you’re going to be building up interest while you’re in school.

And of course, interest can also compound. This means that your unpaid interest can be added to your loan balance principal at specific times over your loan term, requiring you to pay back more than you may have thought initially. While lenders can vary greatly, it is common for accrued and unpaid interest to be capitalized (i.e., added to your principal balance) after you leave school, which is why making interest payments while in school can save you a lot of money later on.

Your Repayment Term

You’ll also want to explore any repayment plan options offered by your lender. Federal loans offer a wide range of payment plan options, including income-based repayment plans and deferred options. While some private lenders typically offer different payment plans (and some may even require that you make payments while in school), you’ll want to get in touch with your lender early on so you can find out more about them. From there, you can begin to think about how you might want to pay off your loans down the road.

Brainstorm a Plan For Managing Debt While in School

Now that you have a better understanding of your loans, it’s time to start thinking about managing your debt while still in school. It’s not as difficult as you might think!

Create a Detailed Budget

Begin by knowing where you stand when it comes to your income and expenses. This is the only way to figure out if you’ll be ready to pay your loans while in school.

Creating a budget is simple enough. Begin by calculating your average monthly income. Then, subtract recurring expenses that are necessities. This might include:

  • rent and utilities
  • car insurance
  • groceries
  • existing debt payments (credit cards, car loans, etc.)

Next, subtract other everyday expenses, like weekly food carry-out/delivery, online shopping, and even your video streaming subscriptions. Do you still have some money left over after you’ve factored everything in? If so, then you might consider using some of that to begin paying down your student loans while you’re in school.

Explore New Income Options

What if you don’t have the funds to begin paying off your loans in school? You might consider revamping your budget a bit to free up money. Canceling subscriptions that you don’t need, like a gym membership can help. Additionally, exploring the wide range of free at-home workout videos that are online is a great option.


You might also consider taking on a side hustle or part-time job. This can bring in additional income while you’re in school. From selling things you no longer need to taking on some freelance work, there are plenty of ways to bring in extra money that can be used to pay down your debt while in school.

Prioritize High-Interest Loans

So, you’ve figured out a way to start paying off some of your student loan debt. Congratulations! Now, how should you prioritize your payments? Generally, you’ll want to start by paying off your debt with the highest interest rate first. With multiple loans, it’s a good idea to check with your lender to ensure your payment will go towards a preferred loan.

Consider Enrolling in Automatic Payments

Look into enrolling in automatic payments on your student loans. This will save you the hassle of remembering to log in and make a loan payment each month. In some cases, you may even enjoy a small interest-rate discount for enrolling, so why not take advantage of it? You can un-enroll in automatic payment any time. Additionally, many lenders allow you to decide precisely how large, or small, a payment you wish to make..

Benefits of Paying Off Debt While in School

By paying down even a small portion of your debt while you’re in school, you can save yourself a lot of money (and stress) down the road. Also, if you have subsidized loans that aren’t accruing interest during your course of study, paying down these loans, when possible, will allow you to graduate with less debt. In turn, this will free up cash that you can use to buy a home, save for retirement, or begin working towards other financial goals.

If your loans aren’t subsidized, staying on top of your interest payments can save you a lot of money by avoiding interest compounding and reducing the total amount of debt accumulated by the time you finish school.

Paying down your student loans while you’re in school may also reflect well on your credit, especially if you don’t have much credit history when you start school. By the time you graduate, the student loan payments you’ve made can help you establish a stronger credit score. From there, you may have an easier time getting approved for a lower interest rate if you choose to refinance your student loans—which can save you even more money over the repayment term of your loans. In this sense, staying on top of your student loans while you’re in school can pay off!

What if You Can’t Afford to Make Payments in School?

Now if you’ve crunched the numbers and know you won’t be able to make payments on your student loans anytime soon, that’s okay! This is not something every student can do.

Still, it may be worth revisiting your budget from time to time and looking for ways to put some cash towards your student loans whenever possible. When the opportunity does arise, putting extra cash towards your loans won’t hurt—and every little bit counts.

The Bottom Line

While not everybody can begin paying off their student loans while in school, merely having a plan and educating yourself about your loans can go a very long way. From there, you can feel a little more confident and prepared as you finish school and enter into your full loan repayment period. As you can see, with just a little research and planning, student loans don’t have to be intimidating. They empower students like you every year to receive the education they need to do big things later in life!

Please note that the information provided on this website is provided on a general basis and may not apply to your own specific individual needs, goals, financial position, experience, etc. LendKey does not guarantee that the information provided on any third-party website that LendKey offers a hyperlink to is up-to-date and accurate at the time you access it, and LendKey does not guarantee that information provided on such external websites (and this website) is best-suited for your particular circumstances. Therefore, you may want to consult with an expert (financial adviser, school financial aid office, etc.) before making financial decisions that may be discussed on this website.