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Student Loan Debt Reduction Strategies

November 4, 2016

By Katrina Dunlap

“The only man who sticks closer to you in adversity than a friend is a creditor.” – Unknown

“Creditors have better memories than debtors.” – Benjamin Franklin

If you are a college graduate or currently a matriculating graduate student, chances are you have student loans. While student loans have made it possible for students to pursue their academic desires, many graduates have been consumed and burdened by these financial mechanisms. It has been widely noted that approximately 43 million Americans are burdened with nearly $1.3 trillion in student loan debt, which compared to last year, is a six percent increase.[i][ii][iii]  Many economists are predicting that student loan debt will negatively impact the housing market and the U.S. economy in the long term similarly to the 2008 Great Recession. Even worse, graduate students with huge amounts of student loan debts are being turned away from car, home and business loans.

How can one quell this inevitability?

The easiest and most common strategy to reduce your student loans is refinancing. However, there are other strategies, often overlooked, that can be employed and help alleviate the weight of your debt by the time you complete your program.

Canceling subscriptions

If you were to re-evaluate every subscription, from cable and Internet service providers to your daily newspaper, you would be able to discern the necessity of these monthly financial obligations. Transferring the savings from limiting or canceling most of these subscriptions to paying down the interest on your student loans could save you money in the long-run.

Volunteering to pay it down

Do you have a passion for helping others? Well, why not offer your time and in return get your student loans reduced? Organizations like SponsorChange.org “empower volunteers by creating a pathway to meaningful skill-based project opportunities at social impact organizations, while helping volunteers raise funding to pay down their student loan debt.”[iv] For example, if you are skilled in graphics and web design or communications, there are opportunities to support a non-profit organization to revamp its website during a 2-month period.  As a volunteer, you will be rewarded for completion of the project with a direct loan payment up to $1,000 in some cases. That’s a win-win.

Doubling down

The treacherous part of paying down student loan debt is paying off the interest. Since interest accrues and accumulates daily, you become further and further away from tackling the principal balance. Consider that you make your monthly student loan payment for 12 consecutive months. If you were to double your payment during those months, you can move closer to attacking the principal balance sooner rather than later. Additionally, you can save on interest payments in the long run. By automating direct payments to your loan servicer following a semi-monthly or bi-weekly paycheck, you can make this effort less obvious. This strategy can also motivate your commitment to reducing your debts in a consistent manner over time.

Go abroad

Working abroad is nothing new; however, as student loan debts swell, graduates are finding that working abroad helps pay off debts faster. The most popular work locations include places like the India, Korea or China where graduates are opting to teach English while benefiting from the low cost of living in these countries. Per the 2016 tax rules, the Foreign Earned Income Exclusion rule allows US citizens working abroad to claim income tax exemption on the first $100,800 earned each year and deduct qualified housing costs.[v] What doesn’t have to be paid to Uncle Sam can be sent to Auntie Navient or Grandmother Great Lakes with love!

In conclusion, the price that students pay after accepting a student loan has long-term implications beyond graduating. Student loans, while they are important for educational and career attainment, have also stifled personal income, wealth and prosperity. Don’t allow student loans to overwhelm. Consider the aforementioned strategies to reduce your student loan obligation one payment at a time.


[i] The inspiration for this blog originated from Betsy Mayotte’s U.S. News article entitled “4 Creative Ways to Reduce Your Student Loan Debt,” June 18, 2014. http://www.usnews.com/education/blogs/student-loan-ranger/2014/06/18/4-creative-ways-to-reduce-your-student-loan-debt

[ii] “A Look at the Shocking Student Loan Debt Statistics for 2016,” Accessed 20 October 2016, https://studentloanhero.com/student-loan-debt-statistics/

[iii] Grant, J. Student Loan Debt The Next Bubble? American Bankruptcy Institute Journal. (12/01/2013) ,  32 (11), p. 44 – 45,88-89.

[iv] “About Us,” SponsorChange. Accessed 26 October 2016. http://www.sponsorchange.org/?page_id=27

[v] “Figuring the Foreign Earned Income Exclusion,” Internal Revenue Service. Accessed 26 October 2016, https://www.irs.gov/individuals/international-taxpayers/figuring-the-foreign-earned-income-exclusion


This blog post has been edited and updated to reflect current changes in information.

Edited by Sophie Gorshenin, 11/7/2018


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