Six Different Strategies to Manage Your Loans

Americans get loans because many things in life aren’t feasible by purchasing through cash alone. Take, for example, college education. It’s nearly impossible to come up with the total cost of a degree through savings alone. That’s where loans come in to help cover the expenses.

Because many Americans have loans, it’s expected that most Americans are in debt. The average American has $90,000 in debt, but massive purchases like homes and cars inflate that. However, eventually many of them can pay them off and even have enough for savings.

There are a few different strategies to help you manage your loans so that you’re not weighed down by debt.


Budgeting is quintessential for loan management, especially if you have multiple loans. First, you have to write down each loan, their interest, and minimum payments every month. Then, add them up, and put them into your budget.

someone planning their budget with notes and a calculator

If you’re planning to make a new loan, never exceed your expenses for the month, and make sure you have enough for your savings. If you can’t afford a new loan, don’t do it.

However, if it’s a crucial loan for an emergency, consider looking into your budget once again. For example, look into a loan that you can hold off paying for a couple of periods, or maybe look into refinancing a previous loan instead. Then, you can make room in your budget for the new loan.

Create a Debt Reduction Plan

If you have a lot of loans and you’re finding it challenging to make all the minimum payments, you may want to look into creating a debt reduction plan.

The first step is identifying which debts are costing you the most. To do this, list all of your debts from the highest interest rate to the lowest. Once you know this, you can first focus on paying off the debts with the highest interest rates.

The next step is coming up with extra money to put towards your repayment plan. Again, you may need to get creative here- consider getting a second job or looking into ways to make some extra cash on the side.

Once you have extra money, you can start making larger payments on your debt. The key here is to make sure that you’re still making the minimum payments on your other debts. By doing this, you can get out of debt quicker.


Refinancing is when you take out a new loan to pay off an old one. This can be a good option if you can find a loan with a lower interest rate. However, it’s essential to ensure that the repayment period is the same or shorter than the original loan when you refinance. This way, you don’t end up paying more in interest overall.

First, check your credit score to see if refinancing is right for you. You need to have a good credit score to qualify for a lower interest rate. If you don’t have a good credit score, you may want to consider other options.

You should also compare the new loan’s interest rate with your old loan’s. Ensure that the new interest rate is at least two percent lower than your old one. If it’s not, then refinancing might not be worth it.

Get Government Loans

If you’re struggling to repay your loans, you may want to consider getting government loans. These are loans given by the government and typically have lower interest rates. They also often have more flexible repayment options. For example, some outstanding loans include the United States Department of Agriculture home loan. This particular loan can help you purchase a home at a much lower rate than others.

Consolidate Your Loans

Another option is to consolidate your loans. This is when you combine all of your loans into one single loan. This can be a good option if you struggle to keep track of multiple loans. It can also help you save money if you can get a lower interest rate.

White piggy bank with a calculator and coins

To consolidate your loans, you first need to see if you qualify. You need to have a good credit score and a steady income to do this. If you don’t have both of these things, consolidating your loans may not be an option.

If you do qualify, then you can start looking into consolidation companies. Make sure to compare rates and fees before choosing one. You want to make sure that you’re getting the best deal possible.

Consider Loan Forgiveness

If you’re struggling to repay your loans, you may want to consider loan forgiveness when the government or your lender agrees to cancel all or part of your loan. This can be a great option if you’re unable to repay your loans.

There are a few different ways that you can qualify for loan forgiveness. The first way is through public service. If you work in a public service job, you may be eligible for loan forgiveness after ten years.

Another way to qualify is through teaching. For example, if you work as a teacher in a low-income school, you may be eligible for loan forgiveness after five years.

The last way to qualify is through income-based repayment. This is when you make your payments based on your income. If your income is low, you may be eligible for loan forgiveness after 20 or 25 years.

These are just a few of the different strategies you can use to manage your loans. Pick the one that works best for you and stick with it. You’ll be glad you did when you’re debt-free!