4 Ways to Pay Back Your Student Loans Without Compromising Your Finances

1. Enroll in a Student Loan Repayment Plan

Income­based repayment plans are on the rise as an increasing amount of Americans struggle to repay their student loans. There are a variety of repayment plans to choose from that base monthly payments on income, typically capping at 10% of discretionary income. These programs help avoid loans being placed into default by gradually paying back the loans at a smaller, monthly rate. Enrolling in a repayment plan reduces the chances of having a loan placed into default and secure finances. Plans such as REPAYE (Revised Pay As You Earn) cap monthly payments based on the borrower’s income and forgive the remaining debt balance after 20 years of payments. Unlike the PAYE (Pay As You Earn) program, REPAYE is available to anyone with federal student loan debt.

For additional repayment plan resources, visit Studentloans.gov.

2. Create a Strict Budget

Creating monthly budgeting plans is crucial to ensuring financial security while paying off student loans. Cutting unnecessary expenses such as cable, excessive nights out, Netflix, or gym memberships saves a large amount of money that builds up quickly.

There are many great budgeting apps available to download on your phone that help sort finances and savings.

3. Substitute purchasing a new car with ride-sharing, carpooling, or public transportation

Another way to save money for repaying student loans is to avoid buying a new car. Stacking up loans for a new car along with student loan debt creates an even greater amount of debt. In order to save money, try rides-haring, carpooling, or riding public transportation. These are more cost effective than taking out a loan to buy a new car.

Many cities have ridesharing services such as car2go and Zipcar.

However, if none of these are realistic alternatives for you, buy a used car instead that you can pay in full.

4. Pick up a part-­time or freelance job

Work a second job to pay off your student loans. For example, picking up a few shifts a week at as a server is an excellent way to make additional income.

Another option to make some extra money on the side to work as a freelancer. There are freelance opportunities for a wide variety of skillsets. Some freelancers are marketing managers, writers, graphic designers, or photographers. Not only is freelancing a great way to make extra money on the side, it also helps build your resume and start your own independent business.