Student loan debt can follow borrowers long after graduation, but a few practical strategies may help shorten the repayment period and reduce the amount paid in interest.

The average public university student borrows about $26,000 to earn a bachelor’s degree, according to information provided by First Horizon. Paying that debt down faster can also improve a borrower’s debt-to-income ratio, which lenders consider when evaluating applications for mortgages, auto loans and other financing.

Here are eight strategies borrowers may want to consider:

  • Pay high-interest debt first. Credit card balances may carry higher interest rates than student loans. Reducing that debt first can free money for additional student loan payments.
  • Consider refinancing. A new loan with a lower interest rate or better terms could reduce overall costs. Borrowers should compare rates, fees and fixed versus variable interest options before refinancing.
  • Review repayment plans. Federal student loans may offer standard, graduated, extended or income-based repayment options. Private lenders may also provide choices such as interest-only payments, fixed payments or deferment.
  • Check workplace benefits. Some employers provide student loan assistance, bonuses or other education-related benefits that can help employees reduce debt.
  • Look for tax savings. Eligible borrowers may be able to claim a student loan interest deduction, leaving additional money available for debt repayment.
  • Create a realistic budget. Tracking expenses can uncover money that could be redirected toward loans. Cutting restaurant meals, subscriptions or other discretionary spending can add up quickly.
  • Pay a little extra. Even modest additional payments can make a difference. Biweekly payments can result in the equivalent of one extra monthly payment each year. Some lenders also offer a small interest-rate reduction for automatic payments.
  • Investigate loan forgiveness. Teachers, public service employees, military members, some nonprofit employees and others may qualify for federal forgiveness programs. Public Service Loan Forgiveness, for example, may forgive remaining eligible debt after 120 qualifying payments.

The payoff can be substantial. The First Horizon example shows that adding $100 a month to payments on a $30,000 loan at 5.5% could shorten repayment by roughly 18 months and save about $2,000 in interest.

The important first step is knowing what you owe, understanding your loan terms and finding a repayment strategy that fits your budget.

First Horizon Bank is a leading regional financial services company, dedicated to helping our clients, communities and associates unlock their full potential with capital and counsel. It’s the powerful tools you need with the personal service you deserve. Contact First Horizon for all your banking needs.

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