Debt management is a crucial aspect of personal finance that involves strategies and practices for handling your debt effectively. It includes understanding the types of debt you have, creating a plan to pay off your obligations, and making informed financial decisions to avoid falling into unmanageable debt. Effective debt management can help you reduce financial stress, improve your credit score, and achieve long-term financial stability. Whether you're dealing with student loans, credit card debt, or an auto loan, learning how to manage your debt is essential for maintaining a healthy financial life.
Complete Loan Exit Counseling
Federal loan exit counseling is required before you graduate to ensure you understand your student loan obligations. This counseling will inform you about your grace period, loan totals, and help you choose a repayment plan. Exit counseling is not required for private student loans.
Track Down All Your Loans
Contact the Office of Student Financial Aid for a review of your loans. These could include federal Stafford loans, private student loans, Health Professions/Nursing Loans, and institutional loans. You can also track down your loans online:
- Federal Direct Loan History via My Federal Student Aid
Log in using your FSA ID. You will see a list of your federal loans borrowed to date. Click on the number next to each loan to find the interest rate, loan status, and contact information for the company that is servicing the loan. - Institutional Loan History – ECSI
Serviced by the University of Iowa, your full history of institutional loans can be found online through ECSI. - Private Educational Loans
Contact the lender, bank, or credit union that you borrowed from directly or review your credit report.
Register with Your Loan Servicer(s)
Your federal loan servicer will be listed at the end of the exit counseling module. You can also find your servicer's information through your profile on My Federal Student Aid. It's important to set up your account with your federal loan servicer and any other lenders/servicers you have for private loans as soon as possible.
Payment Strategies
- Snowball: Make all minimum monthly payments. Put any money left over towards your smallest loan. Once the smallest loan is paid off, move onto the next smallest. The excess money going toward loan payments will increase as you pay off each loan.
- Avalanche: Make all minimum monthly payments. Put any money left over towards your loan with the highest interest rate. Once that loan is paid off, move on to the next highest.
Loan Tips
- Pay off your loans as soon as possible
- Set up automatic payments to avoid missing a payment
- Contact your loan servicer if you are interested in public service loan forgiveness
- We do not recommend consolidating federal and private loans together as you will lose the low federal interest rates as well as the payment plan options
- Include all debt payments on your monthly budget