student loan repayment options

5 Savvy Strategies for Managing Student Loans as a Digital Nomad

Student loan debt in the U.S. has reached scary new heights. Altogether, Americans owe $1.48 trillion in education debt. In the Class of 2017, the average graduate left college owing $39,400 — and that doesn’t even include whatever student loans they might take on in the future for graduate school.

If you’ve got student loans, you know how stressful it can be to send off big payments to a loan servicer each and every month. But rest assured, your student loans don’t have to stop you from building a career you love while traveling the world.

By exploring your student loan repayment options and finding the right approach, you can still accomplish both these goals. Whether you’re trying to become a digital nomad or simply travel more, here are five savvy strategies for managing your student loans.

1. Write down the details of all your loans

Before making any decisions about your debt, you have to know what you’re dealing with. With several loans (the average student has 3.7, according to Experian) and multiple loan servicers, it’s easy to get confused.

So make sure to track down all your loans and write down the details of each, including the total amounts owed, interest rates, and monthly payments. Use a student loan repayment calculator to crunch the numbers and get a long-term view of your loan costs.

Also make sure to figure out who your lenders and loan servicers are, and set up online accounts with each to manage repayment. Finally, keep a record of your usernames and passwords, so you don’t end up in a far-flung location unable to access your accounts.

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2. Set up autopay so you never miss a payment

In most cases, you can postpone payments on your student loans during school and for up to six months after you graduate. Once this grace period ends and repayment kicks in, you can hit the ground running by setting up autopay on your student loans.

Autopay lets you save your bank account information in your online loan account and authorize the loan servicer to automatically withdraw the payment every month. Not only will this ensure you never miss a payment, but it typically also gets you a 0.25% discount on your interest rate.

Setting up autopay can be especially useful if you’re traveling, since it could be easy to forget about a bill or miss communications from your student loan servicer when you’re on the move. Of course, autopay might not be a good idea if you can’t afford your bills and are worried about overdrawing on your account.

But as long as your bank account balance isn’t hovering near zero, setting up autopay is a smart way to “set and forget” your student loan payments.

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3. Find the right student loan repayment plan for your budget

Budgeting for student loans can be stressful, especially if you’re not making much money after graduation. Plus, you don’t want to be forced into any job with a paycheck, but instead want one that aligns with your interests and goals.

Luckily, federal student loans come with a variety of student loan repayment options. Most start on the standard 10-year plan with fixed monthly payments. On this plan, you’ll pay the same amount each month, and you’ll pay off your loan completely after a decade.

But if your bills are too steep, you could adjust them by applying to another plan. Here are a few student loan repayment options that could help:

  • Income-driven repayment: Plans such as Income-Based Repayment, Pay As You Earn, Revised Pay As You Earn, and Income-Contingent Repayment adjust your monthly payments to 10%, 15%, or 20% of your monthly income and extend your terms to 20 or 25 years. If you’ve still got a balance after 20 or 25 years on an income-driven repayment plan, the government will forgive the rest.
  • Extended repayment: Plan that lowers monthly payments and extends your term to 25 years.
  • Graduated repayment: Plan that lowers monthly payments and gradually increases them over a period of 10 years.

Lowering your monthly payments on an income-driven repayment plan or the extended repayment plan could be useful if you can’t afford the 10-year plan. The downside, though, is you’ll be in debt for longer and pay more interest overall.

Of course, you can always pay your loans back faster if you start making more money in the future. Don’t be afraid to adapt your repayment plan as your financial situation changes.

Note that these student loan repayment options are only available for federal student loans. If you’ve got private student loans and are struggling to pay them back, speak with your lender or loan servicer about your options.

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4. Throw extra payments at your loans to pay them off faster

Dealing with student loans can be a delicate dance. On one hand, you don’t want your hard-earned money to disappear to student loan bills. But on the other hand, you want to get rid of debt ASAP and eliminate your student loans once and for all.

Plus, the faster your pay off your loans, the less money you’ll waste on interest. So if you can swing it, consider throwing extra payments at your loans.

Perhaps you can find room in your budget by reducing your spending or moving to a city with a low cost of living. Or maybe you can supplement your income by getting a part-time online job or setting up a side hustle.

Whatever extra money you can put toward your loans will pay them off faster, and there’s no penalty for making extra payments. Just make sure your extra payments are being correctly applied by keeping an eye on your account and calling your loan servicer if you encounter any problems.

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5. Refinance your student loans for a lower interest rate

With the burden of student loans heavier than ever, more graduates are exploring options for student loan refinancing. When you refinance, you basically give one or more of your old loans to a new lender, such as a bank, credit union, or online lender.

Then, that new lender issues you a new loan with new terms. If you meet credit and income requirements, or can apply with a cosigner who does, you could qualify for a low rate on your student loans.

Let’s say, for example, you owe $30,000 at a 7.0% interest rate. Over 10 years, you’d pay $11,799 in interest. But if you could refinance that loan to a 5.0% rate, you’d pay just $8,184 in interest. By lowering your interest rate from 7% to 5%, you could save $3,615 over the life of your loan.

The other advantage of refinancing is it allows you to combine multiple federal and/or private loans into one. If you’re dealing with multiple loans and servicers, simplifying down to a single loan with a single lender can make repayment easier to track.

A potential con of refinancing student loans

Before you apply for refinancing, note that there could be a major downside to this process. When you refinance federal loans, you turn them private. As a result, you lose access to federal programs and protections, such as the income-driven and other repayment plans described above, as well as federal forgiveness programs.

Private lenders don’t typically has much flexibility for repayment, so you could be out of luck if you run into financial hardship in the future. Before refinancing federal loans, make sure you’re confident about your ability to pay back the loan on-time, as well as comfortable sacrificing federal benefits.

Shop around to find the best rate

If you decide to refinance, shop around with multiple lenders to find the best offer. I checked my rates with a few lenders before finally choosing Citizens Bank, since it gave me the lowest rate. It’s easy to get instant rate quotes with online lenders such as SoFi, CommonBond, Earnest, or Laurel Road, or you could check with your local bank or credit union.

You can also head to Credible.com to check your rates with multiple lenders at once. Don’t forget to explore community banks too, which you can do through student loan refinancing marketplace LendKey.

If you choose to refinance, make sure all the paperwork has gone through before you stop paying your old loan. You wouldn’t want to miss any payments until you’re 100% certain your new refinanced loan is up and running.

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Explore student loan repayment options to find one that works for you

Designing a life of remote work and travel involves some unique financial challenges. If you’re picking up freelance projects, you might have a variable income that fluctuates from month to month.

And if you’re moving from place to place, your budget could look very different depending on where you are. The amount you spend in a low-cost city such as Chiang Mai or Medellin, for instance, might be a fraction of what you’d spend somewhere like London or Singapore.

Plus, you need room in your budget for flights, accommodations, and other travel expenses. So the last thing you want as you’re building your location-independent career and exploring the world is for student loan bills to eat up your paychecks.

Although student loans can be stressful, ignoring them would only make your debt worse. Set aside time to choose the right repayment plan, and find strategies for lowering your monthly payments or getting out of debt faster.

If you’re open to living out of the country long-term and working for a foreign employer, you could even eliminate monthly student loan payments and get your debt forgiven. Learn more about this secret strategy for conquering student loan debt here.

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