Creating a Student Loan Repayment Plan: Eight Tips to Pay Down Debt

What you need to know about paying off student loans
Saving for college
Student loans
Student budgets
Written by: Shannon Mitchell, Portland Business Banking Team Lead
Graduate cheering with diploma

With college behind you, you may feel optimistic about your earning potential—with good reason. A report by the U.S. Census Bureau reveals that over an adult's working life, high school graduates can expect, on average, to earn $1.2 million, while those with a bachelor's degree will earn $2.1 million; and people with a master's degree will earn $2.5 million.

Of course many high-earning professionals such as doctors, attorneys and dentists finish school with substantial educational debt. For example, according to the American Dental Education Association, four out of five recent dental school graduates had student loan debt greater than $100,000. The average educational debt for all indebted dental school graduates was more than $287,000.

If you have student debt, here are eight things to consider:

  1. Federal student loan debts are not easily forgiven, even in a bankruptcy, and interest continues to accrue on unpaid balances. In the event of death, federal loans are only discharged with acceptable documentation. Make a plan to pay off the debts long before then.
  2. If seeking forgiveness, consider the Public Service Loan Forgiveness Program (PSLF). The PSLF has strict requirements regarding federal (not private) student loans, so be sure to accurately complete and submit an employment certification form. Although the federal PSLF program requires diligence it may still be a good option for you. For insights, visit the U.S. Department of Education Federal Student Aid website at
  3. Do your research. A range of repayment and assistance programs are available through the U.S. Army, Navy and Air Force, as well as the Indian Health Service and the National Health Service Corps. If you’re willing to work in an underserved area, assistance may be available through your state’s loan repayment program and associations affiliated with your profession.
  4. Maintain a repayment schedule. If the standard 10-year plan is too difficult and your payments seem too high for your income, explore income-driven repayment programs for federal student loan debt.
  5. Consider consolidating and refinancing your private student loans to lower your interest rate and save money over time. Remember, refinancing federal student loans into a private loan can mean forfeiting access to government benefits such as income-driven repayment and deferment.
  6. Don’t defer the interest on student loans. Over time, compounding interest will add to your debt.
  7. Build a budget. First, calculate your after-tax income. Then, plan for your needs and a few of your wants, and set aside emergency funds. You can modify the plan over time. As you strive for long-term goals such as buying a home, following a budget may mean delaying luxury purchases.
  8. Talk with a trusted banker and your tax advisor to help you assess the options, develop a budget, determine if refinancing is right for you, and fine-tune your repayment strategy. 

Your banker should be a reliable resource as you pay off debt and look to goals such as buying into a business or purchasing property.