How to Repay Your Student Loans in One Year

The number of student loans reached an all-time high of $1.41 trillion in 2019. This was revealed in data that was recorded by Experian, a credit reporting agency. This is a staggering figure and is among the highest debt of any department in the United States. 

Almost 43% of college graduates leave their education institutions along with debt in some form. The average student loan owed by a single person is $31,172. This means that, every month, graduates will be paying $393 for the next 10 to 30 years. 

Now, this might not seem like a big deal since almost everyone you know has this debt. The expectation of working straight out of college can also make you feel this debt problem is next to nothing. 

In reality, the prospect of landing a dream job can take years. You might change your plans and decide to make a lavish purchase to celebrate your degree. The circumstances can be different for everyone. 

The end result is that the importance of paying off student loans is the farthest from your mind when you are getting your life in order. 

But unless you pay off this omnipresent debt, it can slowly drain your finances. No matter how hard you work, you are laboring for the banks until the debt is cleared. Come to think of it, your money does not belong to you as long as your student loan debt is hanging over your head. 

This is precisely why paying off your student loans should be at the top of your priorities. It might seem like an arduous task to attempt paying off your student loans in one year. But with making a smart decision and reevaluating your finances, paying off the average student loan of $31,172 can be quite achievable. 

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The Payment Process

As silly as it may seem, preparation can be a vital step to prepare to pay off your debts. Apart from taking the mental decision to make the debt repayment, having access to the right resources and help can be incremental to the overall outcome. 

This can include such activities as:

Research your options during the grace period.

Most of the student loans have a grace period of six months. This period applies six months after you graduate or you drop out. This gives you enough time to research your repayment options. 

Have proactive communications with the loan provider.

Your relationship with the loan provider will not reduce your debt. However, it can mean a whole lot when you might run into trouble repaying your debt in time. 

Along the same lines, it is a great idea to update all the contact information, including emails, phone number, and street address as well. Make sure to keep it known to all the lenders. It will make it easier for the lenders to keep you updated. Lenders also appreciate this responsible attitude and your willingness to cooperate towards a fast solution. 

Avoid late fees by setting up automatic payments.

Irrespective of your determination and budgeting, unforeseen expenditures can come up every now and then. These situations can prevent you from making the required monthly payment. 

When you have an automatic payment option in place, you will not have to deal with delaying payment and incurring late fees as well. It may not seem like a significant amount, but if it happens frequently, it can accumulate to a substantial amount. 

An added advantage to setting automatic payments is that you will get a quarter-point interest rate discount. The auto-pay deduction applies to both banks as well as private lenders. 

Set a target date.

A target date set ahead of the exact time of payment can be a great buffer. This will allow you to be ready for any setbacks that you will encounter on the way. 

Get a professional perspective.

No, we don’t mean hiring a finance guru to help you with your situation. Although if you can do so, it will be a great advantage. 

Books and articles on personal finance can be a huge benefit. This might sound absolutely hopeless and cheesy, but they are a great place to gain valuable insights. You will get to understand the direction as well as get the right strategies to take control of your finances. 

Take Stock of the Situation

This one sounds very routine and mechanical. But it is always the best place to start. It is easy to tell someone to start paying more than the monthly minimum. But unless you know the financial situation you are in, it is difficult to make a decision. 

Start by writing down the exact figure of your debt. You can either use a spreadsheet or an online personal finance tool to make it easier. Mint is an excellent example of an online finance tool.

Organize everything related to earnings – active and passive earnings, your savings, if any, and of course, your debts. Include everything from your utilities, to rent and phone expenses. This will give you a birds-eye view of your finances and how much you really have in student loan debt. 

Although you have the knowledge of the looming debt in our minds, somehow, it always gets pushed back into the corner while making a purchase or enjoying our life. When you have the total figure in front of you, this can be a wakeup call, as opposed to passively knowing that you are in debt. 

Set a Budget

After you have the full idea about your debts, set a monthly budget. To begin, remove all your expenses from your income. Monthly expenses such as rent and utility bills cannot be compromised, so it makes no sense to include in the budget.

Now take a look at how much money you have left. This way, you will be able to determine how much money you can put into the loan repayment. As your income increases gradually, keep adding more to this figure. 

To reduce the hard work, use online budgeting tools to make budgeting easier. Some of the best online budgeting tools include MintPersonal Capital, and YNAB.

If you don’t have a job at this point, consider applying for forbearance. Although the interest will accumulate, you will have the option to suspend your debt repayment for a year or so. However, only consider this option if you have no other choice, as it defeats the purpose of repaying loans early. 

If you have a steady income but you feel stretched, consider income-based repayment options. You will have the option to pay only a certain percentage of your income instead of paying a flat rate every month. 

Start Making More Money

It is safe and practical to assume that you will start making more money as the years go by. You will eventually spend more time in the chosen career and develop skills as well. For some, it can also mean taking on other jobs or asking for a raise as well. Whatever it may be, increasing your income is vital to making successful loan repayment. 

Some of the ways you can supplement your loan payment tab include:

  • Cash gifts given at graduation
  • Starting job bonus 
  • Earning a raise for a project 
  • Any financial windfall 

Another less known way to get a cash boost is to ask if your potential employer can help in repaying your student loans. You will be surprised to know that more and more companies have student loan repayment benefits for recent graduates. In most companies, this benefit is applicable to full-time, as well as part-time, employees. 

According to a survey published by the Society for Human Resource Management, up to eight percent of corporate companies make contributions towards student loan repayment. Among the notable companies that offer these benefits include Google LLC, Microsoft Corporation, Apple Inc, Aetna, and Fidelity, among others. 

If you have been working in a reputed company, dig deeper and see if there are any benefits and programs that you can use. If you are on the market for a new job, take careful consideration and check out if a prospective company offers such programs to make your student loan repayment a little easier. 

It is always a risky venture when you decide to increase your earning potential. Whether it involves taking on a higher paying job, asking for a raise, or considering a side hustle, you will feel uncomfortable and pushed to the edge. 

But as the adage goes, any significant benefit also involves considerable risk. 

Cut Down Your Expenses

We hate to sound just like the rest, but there is no better way. Even if you have an ironclad budget and a good steady income, if you don’t have control over your expenses, nothing will come to fruition. 

The smartest way to complement your budgeting and income is to spend less money. Some proven and practical ways to cut down your expenses are:

Refrain from buying luxury items.

When you are locked into paying off your student loans, it is not the wisest move to buy a brand new car, expensive gadgets, and other personal items. 

In the beginning, you will feel left out, and the pinch can be real. But once you have the debts cleared, you can indulge in your decadent tastes all you want. 

Practice mindful buying.

At the risk of sounding like a lifestyle guru, the root of almost all financial problems stem from unrestricted buying. Following trends and buying the latest everything can blow your finances out of proportions, irrespective of whether you are paying off a student loan or not. 

It is a good practice to buy only the essentials and only those items that you need. Avoid buying two pieces of the same item as well. 

Keep eating out to a minimum.

According to a report published by Statista, an average American spends more than $4,000 per year on eating out, as of 2017. Although this figure may not strictly pertain to debt bearing individuals, it is a reflection of the love for eating out instead of eating at home. 

To keep your expenses low and add cash to your loan repayment pot, practice eating at home. Not only will this save a ton of money, but it is also the healthiest way for your mind and body as well. 

Consolidate Your Payments

Consolidating payments is an excellent option if you have loans from a number of sources. It will be much easier to work towards making a single consolidated payment rather than trying to manage multiple payments every month. It works best if you have a good-paying job, as well as a good credit history. 

Another great option is to refinance your student loans. It allows you to club multiple payments into one. An added advantage is that refinanced loans also have lower interest rates. You can choose a loan that has a shorter term than the original one or a loan that has a longer-term. 

If you choose to refinance your student loans, you will need a good credit score. It is a significant step to expedite your repayment plans with lesser interest as well, especially if you choose a loan that has a shorter term.  

On the flip side, be prepared for making higher payments every month. This will be different if you decide on a loan with a longer-term. 

However, if you have any of the Federal Loan Benefits, refinancing may not be in your favor. You will lose the benefits that come with federal loans, including repayment programs, and if you qualify, loan forgiveness. It is because refinancing is often available with private lenders. 

The bottom line is to weigh the pros and cons of the plan before you decide to consolidate or refinance your student loans.

Stick to a Monthly Payment

After you have a solid plan in place, make sure you follow through it. Whether it is an automatic payment option or manual payment that you have chosen, make it a point to clear the payments every month. 

Some people suggest that making biweekly payments can accelerate the pace of loan repayment. The idea is to make extra payments by making payments every two weeks. However, it can backfire, as the faster you go, the quicker you burn out. 

Since you have a commitment to make monthly payments for a whole year, the best strategy is to stick to a plan you have chalked out for your finance. This way, you will have some sense of control over your finances and not feel pressured by a situation that is spiraling out of control. 

Be Consistent

A lot of times during your crusade to clear your student loans, it can be frustrating. The constant pressure to work harder and churn out money and shelling them out can be an uphill climb. 

It can also be tempting to get it over with and rush towards the finish line. But being consistent is key to making a strong finish. You have to put in the hard work and make payments regularly.  

It is also a good idea to take a step back halfway through the targeted date and appreciate the hard work you are putting in. Be patient and cut yourself some slack. 

Checking your progress is also a great way to keep yourself motivated. On the same note, go back and read the personal finance books that you have in your inventory. You will gain a better perspective for your debt clearing journey and also get motivation as well. 

FAQs Related to Student Loans 

How long do I have to repay my student loans?

Most federal student loans have a repayment period from 10 to 30 years. It also comes with a grace period of six months after graduation. However, you can choose different repayment plans. To know the best repayment plans for your student loans, consult the repayment estimator at the Federal Student Aid website. 

Additionally, the grace period for federal student loans can change under exceptional circumstances, including:

  • Going for active military duty for more than 30 days before the grace period is over
  • Going back to school before the grace period is over 

If your loan is from a private lender, the loan term, as well as the grace period, is a little shorter. But to know the precise details, it is best to consult the lenders. 

How and where can I make the payment for student loans?

If you have planned for automatic payments, the loan will be deducted from your bank account every month. 

If you haven’t and you don’t know how to proceed, the best place of information is the financial aid office of your school. 

Alternatively, you can also get the required information from the National Student Loan Data System

Is it possible to cancel my student loans?

Federal student loans may be canceled but under extraordinary circumstances. This includes:

  • The student who took the loan passes away
  • The student who took the loan becomes permanently disabled 
  • The loan was secured using a false identity
  • The educational institution closes permanently while you are still a registered student or within 90 days of withdrawing from the school
  • The school owed you or the lender a refund after you withdrew from the school 

What are the consequences of missing student loan payments? 

If you miss student loan payments, you will have to pay a late fee. The late fee for missed monthly payments is typically six percent of the monthly payment. Late, as well as missed, payments will also reflect in your credit scores, which can be detrimental to your overall finance. 

If you miss paying federal loans for 90 days, you are considered delinquent. If you do not make the payment for 270 days or nine months, you will go into default. When you go into default, there can be severe consequences, including:

  • Up to 15% of your Social Security benefits, as well as your wages, can be garnished by the government 
  • It can offset your income tax refunds
  • The government can deduct up to 25% of each payment 

Can my student loans be forgiven?

Under certain circumstances, federal loans may be forgiven. Some of these include:

  • If you have a teaching job in a low-income area for more than five years, up to $17,500 of your student loans can be forgiven
  • If you are an employee in any job in a government organization 
  • If you are a registered nurse working for two years or more in an under-serviced area, up to 60 percent of your student loans can be forgiven
  • Lawyers and doctors can be forgiven up to $65,000 and $50,000 respectively

To learn whether you are eligible for loan forgiveness or not, visit 

A student loan is a harsh reality that many Americans grapple with for half their lives. There is no escape from it until and unless you repay the federal debt.

It may seem impossible to clear this massive mountain of bills within a year or two. But with careful planning and with the right resources, you can repay the loan in time to enjoy the rest of your days without the burden and stress. 

We hope this post will prove to be a turning point and help you in your battle to pay off your student loans, hopefully within a year.

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