What Should You Do About Student Debt?

Student debt is a long-term financial obligation, and the right strategy depends on whether your loans are federal or private, your income, and your goals. This guide explains how to organize your loans, understand repayment options, and avoid mistakes that can cost you money.

What is happening

You owe money on one or more student loans. Federal loans are issued or backed by the U.S. Department of Education and come with borrower protections. Private loans come from banks, credit unions, or schools and usually have fewer protections. The first step is knowing exactly what you owe and to whom.

Step by step

1. Inventory your loans. Create a list with each loan's balance, interest rate, servicer, and whether it is federal or private. For federal loans, log in to StudentAid.gov to see your official record.
2. Understand your federal repayment options. Federal loans offer standard, graduated, extended, and income-driven repayment (IDR) plans. IDR plans set payments based on your income and family size and may lead to forgiveness after a qualifying period. Use the Loan Simulator on StudentAid.gov to compare.
3. Consider consolidation or refinancing carefully. Federal consolidation can simplify multiple federal loans but may affect forgiveness eligibility. Refinancing with a private lender replaces federal loans and permanently removes federal protections such as IDR and Public Service Loan Forgiveness. Do not refinance federal loans without understanding these trade-offs.
4. Choose a payment strategy. The avalanche method pays the highest-interest loan first to save the most money. The snowball method pays the smallest balance first for motivation. Either works if you stay consistent.
5. Protect your credit. Set up autopay if it earns an interest discount, and never ignore a bill. If you cannot pay, contact your servicer immediately.

What NOT to do

• Do not ignore letters or calls from your servicer. Default has serious consequences.
• Do not refinance federal loans into private loans without fully understanding the lost protections.
• Do not pay a company that promises to "fix" your student loans for a fee. Federal help is free through StudentAid.gov and your servicer.
• Do not assume you are stuck. Income-driven plans and deferment or forbearance options exist for federal loans.

When to get professional help

If you are in default, facing wage garnishment, or considering bankruptcy, speak with a nonprofit credit counselor or a licensed attorney who handles student loans. The National Foundation for Credit Counseling can connect you with a nonprofit counselor.

How to prevent problems

Review your loans annually. Update your income information for IDR plans on time. Keep records of every payment and communication. If your income drops, apply for a lower payment before you miss one.

Start today by logging in to StudentAid.gov and writing down every loan you have. A clear list is the foundation of every good repayment plan.