Download the Schwab app from iTunes®Get the AppClose

How to Manage Student Loans

Click to show the transcript

Dear Carrie, I’m feeling overwhelmed by my student loan debt. What can I do?

First, understand that you’re not alone. Seventy percent of students graduate with an average of over $33,000 of debt, and a lot of people have much more. It’s a huge burden, especially if you’re just starting out on an entry-level salary. But here’s some perspective that might make you feel a little better. Students loans are what we call good debt. Not only does it carry a lower interest rate than other debt, but it may be tax deductible and could possibly increase your earning potential. Here are some road rules that help if you’re dealing with student debt. First, never ever miss a payment or become delinquent. If you can’t make your monthly minimum payment, call your lender and try to negotiate an extended repayment plan with a lower payment that fits in your budget. Second, think about consolidating your student loans to get an overall lower interest rate.  But read the fine print, and make sure consolidation is in your best interest. Last, if you’re already paying the required minimum on your student loan and have some extra money, here’s how to use it. Contribute enough to your 401(k) to capture your employer match. Start to build an emergency fund. Pay down any credit card debt, which is what we call bad debt. And do all of this before you pay more on your student loan. Remember, you’re not alone. Even if you’re carrying the burden of student loan debt, don’t lose sight of the bigger picture. You’ve made an important investment in your future, and I’m sure it will pay off. For more suggestions, check out my Ask Carrie column.

Student loans don’t have to be overwhelming. In fact, when used responsibly, they can lead to a more secure future. Watch for help with how to manage student loan debt, and check out the Ask Carrie article: Navigating the World of Student Loans.

What you can do next:

  • Explore other Ask Carrie videos and articles on personal finance.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

70 percent of students graduate with an average of just over $33,000 of debt.

*US Department of Education 2018 data

(0519-9KM5)

Thumbs up / down votes are submitted voluntarily by readers and are not meant to suggest the future performance or suitability of any account type, product or service for any particular reader and may not be representative of the experience of other readers. When displayed, thumbs up / down vote counts represent whether people found the content helpful or not helpful and are not intended as a testimonial. Any written feedback or comments collected on this page will not be published. Charles Schwab & Co., Inc. may in its sole discretion re-set the vote count to zero, remove votes appearing to be generated by robots or scripts, or remove the modules used to collect feedback and votes.