Today on the Frugal Cottage we have a guest post today by Nate Matherson on student loan repayment, which affects many people in America today. 


Today, 43.3 million Americans have student loan debt. And, the class of 2015 graduated with more student loan debt than ever before. If you look deep into the student loan problem in the United States you start to see that not only recent graduates bear the weight of student loan debt. In fact, the New York Fed reports that there are close to as many student loan borrowers aged 30 to 39 as there are borrowers under 30. An astounding 11 million student loan borrowers are aged 30 to 39 years old. Moreover, two-thirds of student loan debt is held by borrowers older than 29.


As you age into your 30s you enter into a new financial outlook. Car payments, mortgages, family, and retirement are now in focus. Student loan debt can make financial growth difficult and even delay retirement. The key to beating student loan debt is an efficient repayment plan. Don’t let student loans delay your retirement. Beat your student loan debt using these four repayment tips:


Sign up for auto-pay

This step is easy. By now most of us are familiar with the concept of electronic bill payments. Today, everything from the cable, to the utilities, to student loans can be paid online. Nearly all federal and private student loans are eligible for what is known as auto-pay. Each month, your student loan bill can be paid directly out of your checking account. And guess what, you will get a 0.25% discount for signing up for auto-pay. 0.25% doesn’t sound like much, but over the course of 10 to 15 years it can really add up considering the average graduate is graduating with about $30,000 in debt. Not only will you get a discount, but you will ensure on-time payments. Late payments mean fees and negative credit marks. Auto-pay can set you up for financial success over the long haul.


Pay off your high interest student loans first

Again, this step is pretty simple. However, not all student loan servicers automatically make your payments towards your higher interest loans. You need to make sure that you payments or extra payments are hitting the bullseye. For most of us, private student loans have higher interest rates than federal student loans. You should build a spreadsheet with each and every loan. Target your repayment towards the highest interest rate loans first.


Pay more than the minimum

Making the minimum payment is easy. Making additional student loan payments each month is difficult. If you have the ability to payoff your student loans early, do it! Student loan debt can weigh down your credit and make saving for retirement difficult. Making extra student loan payments each month will save you a lot of money. Some student loans accrue interest daily. Extra principal payments will save your from accruing interest and will help you escape student loan debt faster.


Refinance high interest student loans

You can refinance a mortgage. You can refinance an auto loan. Today, you can even refinance your student loans too. Over the last couple years the student loan refinance industry has emerged. Most student loan borrowers still don’t know that refinancing is even an option. We’ve seen a number of new lenders enter the market in the last year. The increased competition has resulted in very competitive rates and virtually no fees. Rates start below 2% for qualified borrowers and there are no application, origination, or pre-payment fees. If you have good credit, look into student loan refinancing as a way to lower the cost of your student loan debt.

Both federal and private student loans can benefit from refinancing. When you refinance you have the option to tailor your student loan repayment to your financial future. You can choose a new term length from 5 to 25 years and you can even choose a new interest rate type. Savings from refinancing are meaningful and can be used to save for retirement.



Student loans are an unfortunate reality these days. Don’t let student loan debt affect your financial future and retirement. Take the steps mentioned above to efficiently repayment your student loan debt. Auto-pay is easy and efficient. And if you pay your high interest loans off first you will save yourself in interest. Lastly, consider student loan refinancing if you have good credit (+680), a low debt-to-income (below 40%), and a history of on-time student loan repayment.


Nate Matherson is a student loan borrower. Nate Matherson is also the Co-Founder of a company called LendEDU. LendEDU is a marketplace for student loans and student loan refinance. LendEDU helps borrowers get the lowest rates on the market.

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